To offer the best service to your customers and run an efficient operation, you need to be working with the right equipment. But purchasing new or even second-hand equipment can put a severe dent in your Businesses Working Capital
That’s why many Australian businesses use finance to cover the costs of new equipment rather than using up their current business funds.
With traditional lenders becoming more risk-averse and unwilling to provide funding, many businesses are looking for a viable solution to purchase the equipment they need without impacting their cashflow.
With Equipment Finance, you can capitalise on opportunities and fuel your business’s growth by funding the purchase of the equipment you need.
What Is Equipment Finance?
Equipment Finance is a financing solution that enables businesses to access the funding they need to purchase equipment. Funding is usually provided in a fixed-term loan repaid in regular instalments over 24 to 60 months.
The funding allows the business to spread the cost of purchasing equipment over a more extended period and use the additional revenue the equipment generates to pay for the finance cost.
Equipment Finance can be used to fund:
- Business equipment
In contrast to a traditional loan, Equipment Finance is much more flexible and accessible. This is because the asset’s value acts as collateral for the loan so you do not need to use your home or property as security.
An Equipment Finance facility can sit alongside your existing finance arrangements and can be combined with other finance products creating the right solution to help you operate and grow your business.
How Does Equipment Finance Work?
Using Equipment Finance, you can fund your business’s growth and development even if you don’t have readily accessible capital. Equipment Finance allows you to upgrade and replace old equipment without straining your finances.
For example, let’s say that you run a distribution and logistics business and in order for you to take on new clients and grow your business you need to purchase 2 new forklifts. If a new forklift will cost $20,000 to $45,000, and the battery and charger will cost an additional $2,000 to $5,000. This means you need to raise up to $100,000 to purchase the equipment you need.
With Equipment Finance, you can fund up to 100% of the forklift value and spread the cost over a period of 2 years. With the new forklift, you can expand your capacity and take on new clients to raise additional revenue to pay for the financing and grow your business.
At the end of the financing period, if you have chosen to purchase the forklift you will own the forklift or if you have chosen to lease the forklift you will have the option to purchase it for a nominal fee depending on the terms of the Equipment Finance facility.
SME Business Equipment Financing
Equipment Finance is a funding solution designed for the needs of SME businesses.
Despite being a hugely important contributor to the economy and local communities, SME’s have increasingly found it difficult to access funding. With banks and traditional lenders becoming more risk-averse. This is why innovative funding solutions like Equipment Finance have helped SME businesses get the funding they need to operate and grow.
Equipment Finance can be used to upgrade or replace existing equipment with more efficient models. If you have a long trading history, you will find it easier to qualify and access more favourable credit terms.
New Business Equipment Financing
Start-ups and new businesses typically find it hard to qualify for bank loans and other traditional funding solutions. Equipment Finance is much more accessible, even for businesses without a long track record or credit history.
You can fund the purchase of the equipment and machinery needed to make your new venture a success. Because the equipment acts as collateral for the funding facility, you don’t need to provide a large deposit or use your home as security.
Using Equipment Finance you can invest in marketing, staff, and other business areas that will help you increase revenue and profit rather than tying up your funds in an expensive asset
How Long Can You Finance Equipment For?
The length of an Equipment Finance funding facility depends on the value of the equipment you want to buy and the amount you can afford to repay each month. Funding terms range from 24 to 60 months.
Some businesses choose to make a lower monthly repayment to better manage working capital, with a balloon payment due at the end of the agreed contractual term.
How Can I Get Business Equipment Financing?
Most business owners need to move quickly to replace, upgrade, or acquire new equipment to capitalise on opportunities and avoid disruption to operations.
While the application process for a traditional Bank loan can take several months, we can arrange an Equipment finance facility with one of our many lenders in as little as 24 hours and in many cases with minimal paperwork.
Want to know more about how equipment finance can help your business?