There is always a benefit to Small businesses to upgrade the existing equipment or benefit from purchasing the new machinery or latest technology. Unfortunately many business owners simply don’t have enough working capital for outright purchases, making equipment finance an ideal assistance.
As your broker, in addition to helping you with the equipment loan application process, we also have access to a wide range of lenders and finance products, helping you secure the most competitive choice. Here are the common types of equipment finance:
Vehicle and equipment loan
Most common finance loan chosen by businesses to purchase equipment, and comprises 78% of the finance market. The bank uses the asset as security while the repayments are made, just in case of default. The advantage is that your business owns the asset, even while you are making the repayments.
Equipment finance lease
In this option the equipment is owned by the bank/lender and it will be rented to the business for an agreed term at a fixed rental rate. At the end of the agreed term, you have the option to return the equipment, refinance the equipment or outright purchase it.
Hire purchase loan
The equipment is owned by the bank/lender and you make repayments on it until the end of the term, at which point the ownership is transferred to you.
There may be tax implications based on the options you choose, so it’s important to talk to your accountant or financial adviser about any business lending and your specific financial circumstances.