What is Equipment Finance?
Many businesses need to spend money on equipment. Whether it is a large investment such as large-scale equipment or a small investment such as a mobile phone, you will need to consider the best way to pay for it. Weigh out the pros and cons of buying vs financing. Taking out business finance can be a good idea for large-scale equipment where the initial cost exceeds your usual business cash flow capacity.
While most business loans can be used for the purpose of purchasing equipment, the Equipment Finance loan is specifically designed for that purpose as a secured loan backed by the piece of equipment as the collateral asset, which allows for a lower interest rate to apply to the loan. This avoids the need to invest capital in equipment but still allows the business to operate effectively in a short period of time. Further, as this is a secured loan, it is offered to businesses with poor credit ratings.
Loan amounts are approved based on the specific type of equipment and can be approved for up to 100% of the value of the asset. Loan terms can typically be approved for up to 5 years, while the determination of the loan term also depends on the type of equipment purchased.
Do you need Equipment Finance?
Equipment finance is common in businesses that find it hard to source traditional funding and is a great option for start-up companies. So, if you are looking to invest in new equipment or upgrade your business assets, you’ve come to the right place. Speak to one of our professional finance specialists today!
Other Types of Asset Finance
Chattel Mortgage Loans
A chattel mortgage is essentially a car loan specially drafted for business purposes. In the same manner as a car loan, the lender will provide funds or “mortgage” to purchase the vehicle or “chattel” and will use the purchased car as a security. Once the loan is paid in full, you take full ownership of the car.
Novated Lease Loans
A novated lease is a type of loan that is sometimes offered to company employees as a salary packaging option as part of their employment agreement. Using a novated lease agreement also helps with managing and budgeting the vehicle running costs such as registration, servicing, petrol and insurance.