Business Equipment Loans
Equipment and Vehicle Finance.
It’s a common question for small business owners; how do you get your hands on the equipment you need to grow, while still keeping the all-important cash flow and working capital?
Choosing the right equipment finance gives you a lot more benefits other than just preserving your day-today funds:
- Equipment can generate immediate income.
- Equipment finance preserves working capital.
- Repayments let you budget more accurately.
- Loans are often secured by the asset so you usually you don’t have to put your house on the line.
- There could be potential tax advantages to consider.
What can be financed?
Any plant or equipment that can help generate income for your business can usually be financed. Some examples are as follows:
- Motor vehicles.
- Commercial vehicles.
- Plant and machinery.
- Agricultural equipment.
- Computers, photocopiers, and phone systems.
- Medical and dental equipment.
- Office equipment.
- General business equipment.
What types of equipment finance are there?
There are many different financial products available, which is why it’s important to discuss with professional advisers to determine which product may be appropriate for your business needs. These options include commercial hire purchase, chattel mortgage, finance lease, novated lease, full maintained novated lease and operating lease. The more commonly used options are chattel mortgage, finance lease and novated lease. We can help you evaluate the key benefits and differences for each product.
Chattel Mortgage
A chattel mortgage is where the equipment belongs to you from the beginning and the lender has a ‘charge’ over the equipment that secures the loan until the final payment has been made. Because the borrower holds title to the goods, there may be taxation benefits – we recommend talking to a professional adviser (such as an accountant) on how this could best work for you and your business.
Finance Lease
A finance lease is where the lender (lessor) purchases the equipment outright. The borrower (lessee) gets to use the equipment for the term of the lease in return for lease/rental payments. Under a finance lease, the borrower (lessee) traditionally doesn’t need to outlay any working capital and may also be eligible to claim a tax deduction. You should consult your tax adviser about potential tax deductions when considering a finance lease.
Novated Lease for Vehicles
A Novated Lease is a three-way agreement between an employee, their employer and a finance company. The word “Novation” refers to the substitution of a new contract in place of an old one. In other words, the employer agrees to take on the employee’s lease obligations. The employer makes the monthly lease payments out of the employee’s pre-tax income.