Business Equipment finance is primarily used to buy trucks, machinery, forklifts and excavating equipment for your business. Finance can either be in the form of a finance lease, hire purchase loan, an operating lease or through equipment finance such as chattel mortgages or bills of sale.
Before you decide which is the best option for you, it is best to consult your accountant as they will determine the right tax structure for this type of finance. We can work with your accountant and/or chief finance officer to ensure we get the right funding solution and pricing, so that your cash flow can continue to work efficiently.
Benefits of this type of financing
- Allows you to free up your cash flow as you can purchase the full value of the equipment.
- You can manage your cash flow for budgeting and forecasting knowing what your exact payments are.
- The option to determine how you want payments to be made and over flexible terms
- They can be tax effective depending how you structure the debt.
Types of Finance
1. Finance Lease
Just as with funding motor vehicles, this type of leasing can provide finance for equipment without having to provide an upfront deposit. Interest rates and repayments are fixed over terms of up to 5 years.
2. Hire Purchase
A Hire Purchase agreement is a contract between the lender who is deemed the ‘Owner’ and your business, also called the ‘Hirer’. The Hirer has the right to possess and use an asset and the right to acquire ownership of the asset by making progressive payments.
3. Operating Lease
An operating lease is an agreement between your business and the lender to rent equipment for use for a fixed period. At the end of the lease, simply return the equipment to the lender, without the liability of a residual value.
This type of leasing arrangement is an efficient and cost-effective strategy if you are continually upgrading your vehicles and equipment or if you want to rent rather than own your asset.
4. Equipment Loans
If you need to buy equipment for your business, an equipment loan provides financing for the full cost with repayments fixed for the life of the loan. You own the equipment and the Bank takes a mortgage over the equipment as security.