Equipment finance is specifically designed to help businesses acquire necessary equipment, machinery, or vehicles by spreading the cost over time, rather than requiring a large upfront payment. This allows businesses to access essential tools and technology while managing their cash flow. 

Benefits

  • Preserves cash flow : By spreading payments over time, businesses can avoid a large upfront cost.
  • Access to equipment : Businesses can acquire the tools they need without needing to spend large capital upfront. 
  • Investment in growth : Businesses can allocate funds for other growth initiatives while making payments on the equipment. 

Types

  • Equipment loan/Chattel mortgage : The business owns the equipment and the asset serves as security for the loan. 
  • Hire purchase : The lender owns the equipment, but the business can use it while making payments. After the last payment, the business owns the asset. 
  • Finance lease : The lender owns the equipment and leases it to the business for a set period, with the option to purchase it at the end of the lease. 

How it works

The business applies for funding and the lender either purchases and leases the equipment, or provides a loan to purchase the equipment. 

Tax implications

The tax implications depend on whether the business owns the equipment (equipment loan) or leases it (lease). For equipment loans, deductions can be made for interest and depreciation and the equipment is considered an asset on the balance sheet. For leases, the lease payments are often treated as an expense. 

Eligibility

Factors that affect the terms of equipment financing loans include the type of equipment, its age, the business’s revenue and its trading history.

CALL PAUL ON 0417 567 747 TO DISCUSS YOUR REQUIREMENTS FOR THIS TYPE OF FINANCE.

 

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