Business equipment financing can be the ideal solution to help your business grow, however, funding the full cost of the latest equipment for your business can feel daunting.
We discuss the four major benefits of business finance to make light work of your heavy equipment finance journey.
What is business equipment finance?
Similar to most other forms of secured lending, business equipment finance refers to the range of finance solutions that allow your business to purchase the equipment it needs. Unlike unsecured loans, most equipment finance options use the asset that’s being purchased as collateral against the loan. Financed assets are common amongst Australian businesses and are a popular way for business owners to minimise their capital outlay while maximising their growth opportunities.
Need a loan for business equipment?
Finance One Commercial is a non-bank lender that provides opportunities for Australian small business owners to access business equipment finance. Get in touch to find out more.
Apply Online NowBenefits of business equipment finance
Let’s dive into the four biggest benefits of using equipment finance in your business!
Cash flow management
Unless you have unlimited funds (which not even the most established businesses do), attempting to fund the full expense of your equipment upfront can put a serious dent in your working capital. While equipment is certainly a necessary investment in most Aussies businesses, reaping the return of that investment can take time. By funding the purchase of your next piece of equipment, you will generally repay the cost over monthly repayments. This not only means that you can reduce your capital outlay, but also have better predictability over your business outgoings each month.
Top Tip
If you opt to use a balloon payment at the end of your finance agreement, you can potentially minimise the monthly repayments throughout the life of the loan, giving you more opportunity to increase your balance sheet before your loan term comes to an end.
Keep ahead of the competition
With the rate of technological advancements, there’s every chance that the equipment you’re using may be superseded more quickly than you realise. Having the latest equipment can be a game changer to ensure that you can keep up with (or stay ahead of) your biggest competition.
Tax benefits of an equipment loan
Business equipment financing may also come with some tax benefits, depending on how your business is structured. It’s important to always seek your own independent tax advice. Getting the best tax breaks for your small business can be an essential move in staying ahead financially.
Many businesses can claim deductions on depreciation and interest paid, and claim GST-related credits. Make sure you consider talking to your accountant to establish what small business tax claims your business may be able to make when you borrow to purchase equipment.
Advice from professionals
Another clear advantage of using business equipment financing can be the access it gives you to business-specific lending advice. Choosing the right equipment for your business can be tricky, but an experienced lender should have spoken to many people in similar situations to you.
Save time and the trouble of researching equipment for your business and let your lender help steer you in the right direction. You might get some helpful business-building tips along the way!
Equipment finance options
There are a range of equipment financing solutions available to Australian businesses — your individual circumstances and business needs will determine which is going to be the best equipment finance option for you.
Hire purchase
A commercial hire purchase is a finance agreement where a financier will make the equipment purchase on behalf of the business. The business then leases the equipment from the financier over an agreed period of time. The ownership of the asset stays with the financier until the agreement has come to an end and the full agreed amount has been paid (where it can then be transferred to the business).
Finance lease
Also referred to as an operating lease, a finance lease is similar to a hire purchase arrangement, except the lender owns the asset at the end of the lease.
Equipment loans
Also known as a chattel mortgage, equipment loans are one of the most popular financing solutions for equipment financing. Equipment loans operate similarly to a secured car loan, or other secured loan, where the asset is collateral for the equipment loan.
Lending criteria apply
Regardless of which equipment finance option you choose, lending criteria will apply. If you’re concerned that your business (or your personal credit history) may not meet the credit criteria, it pays to do your homework before applying for an equipment loan.
Getting equipment finance with bad credit
When you are ready to find finance for your business equipment, there are likely to be plenty of options open to you. A major bank may seem like the most obvious place, but they are not always as flexible, and they may hesitate if you have a bad credit history. Be sure to look for lenders with great customer service reviews as well as competitive interest rates, and don’t forget to read the fine print so you understand the terms of your loan.
Finance One Commercial is a non-bank lender that provides opportunities for Australian small business owners to access business equipment finance. Get in touch to find out more.
Apply Online NowFrequently asked questions about equipment financing through Finance One
What asset types can I use equipment finance for?
Approved applicants can use equipment finance to purchase forklifts, office equipment, tools, safety equipment, commercial equipment and more!
What are the repayment options for an equipment loan?
The repayments for your equipment loan will vary depending on interest rates, your loan amount and loan term. To learn more about what your potential equipment loan repayments may be, chat with our friendly team.
What documentation do I need to apply online?
Almost every business loan that you apply for will require details of you, personally, as the business owner, and that of your business. The required documentation for business loans that support equipment purchases will vary, however, standard items are your identification, the business’s details (such as its ACN or your ABN for sole trader businesses), plus information such as your balance sheet, profit and loss statement, income and tax returns.
Are business loans available for small businesses?
Yes absolutely; business loans aren’t reserved for mid-size or large businesses. In fact, small business loans are incredibly popular in Australia to help small businesses continue to flourish. Before deciding if a business loan is the right move for you, seek professional business guidance either through an accredited financial planner or business adviser with experience in business loans.
Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
