The right equipment can help your business in becoming more productive and profitable. So, if you want to drive your business forward and don’t have the available cash flow to invest in equipment, you can obtain finance for it. Business equipment finance can be used for purchasing new and used equipment or vehicles. It will help you in conserving your working capital for other purposes like inventory or operating expenses.
Business equipment finance is ideal for established businesses who want to finance the purchase of:
>> Cars, utilities, and light commercial vehicles
>> Trucks and buses
>> Computing and office equipment
>> Printing, medical, and manufacturing equipment, or
>> Industrial plant equipment
Choosing the Right Business Equipment Finance Arrangement
Lenders/credit providers offer many types of business equipment finance options. You have to choose the right one to run your business smoothly. Here is a list of different kinds of vehicle and equipment finance arrangements available in the market:
Finance Lease – This financing arrangement allows you to use the equipment or vehicles and lets you enjoy ownership benefits. The lender/credit provider retains actual ownership of the goods.
Commercial Hire Purchase – In this financing arrangement, the lender/credit provider owns the equipment or vehicles during the hiring period (usually two to five years). And, when you pay the final installment, ownership is automatically transferred to you.
Chattel Mortgage – It is an effective way to finance goods for business use. Under this loan agreement, you will borrow funds to purchase equipment or vehicles (chattel), and you will also take ownership at the time of purchase. Against these benefits, you will provide the security for the loan to the lender/credit provider by way of a mortgage over the equipment or vehicles.
Equipment Rental is an agreement between the lender/credit provider and you whereby the lender/credit provider buys the equipment or vehicles on your behalf and rents it back to you over a fixed period (two to five years).
Seeking the Right Advice for obtaining the Right Business Equipment Finance.
It is vital for your business that you have the right finance structure in place. If you choose the wrong loan package, you may end up hurting the financial stability of your business. To avoid such mistakes, you must consult an expert commercial finance broker. They have a thorough knowledge of the credit policies and standard requirements for business equipment finance. So, they will be able to provide you the right financial advice. You should also seek the help of your accountant in understanding the treatment of depreciation and any tax advantages that may be available to you.