Running a business means constantly investing in the right tools and equipment to stay operational and grow. Whether you're looking at buying new equipment, upgrading existing equipment, or expanding your fleet, the upfront costs can put significant pressure on your cashflow. This is where asset finance comes in as a practical solution for Australian businesses.
Understanding Asset Finance Options
Asset finance allows businesses to spread the cost of equipment purchases over time through structured repayments. Rather than paying a large sum upfront, you can acquire the tools you need while preserving working capital for other business operations.
There are several finance options available, each designed to suit different business needs:
• Chattel Mortgage: You own the asset from day one, with the lender holding security over it as collateral. This option often provides tax benefits through depreciation claims.
• Hire Purchase: You make fixed monthly repayements over the life of the lease, with ownership transferring to you at the end of the term.
• Operating Lease: You rent the equipment for a set period, which can help manage cashflow with predictable payments.
What Equipment Can Be Financed?
Asset Finance Brokers can help arrange funding for virtually any business equipment:
Construction and Heavy Machinery:
• Excavators and dozers
• Cranes and graders
• Tractor and farming equipment
• Truck and trailer combinations
Office and Commercial Equipment:
• Computer systems and technology
• Office furniture and fit-outs
• Manufacturing and factory machinery
• Specialised industry equipment
Work Vehicles:
• Commercial vans and utes
• Fleet vehicles
• Delivery trucks
The Application Process
Applying for Asset Finance involves several key steps. Asset Finance Brokers can guide you through this streamlined application process, helping you access Asset Finance options from banks and lenders across Australia.
First, you'll need to provide details about the equipment you want to purchase, including quotes and specifications. Lenders will assess your business's financial position, including cash flow, trading history, and credit profile.
The loan amount you can access typically depends on the equipment's value and your business's capacity to service the debt. Interest rates vary based on factors like the asset type, loan term, and your business's risk profile.
Benefits of Working with Asset Finance Brokers
An Asset Finance Broker acts as your advocate in the lending market. Rather than approaching individual banks yourself, brokers have relationships with multiple lenders and can compare loan options across the market.
This approach saves time and increases your chances of approval. Brokers understand different lenders' criteria and can match your application to the most suitable finance provider. They also handle much of the paperwork and liaison with lenders throughout the process.
Considerations When Choosing Asset Finance
When evaluating commercial equipment finance options, consider how the repayments will fit within your budget. Fixed monthly repayments can help with financial planning, but ensure they align with your business's cash flow patterns.
Think about the equipment's useful life versus the loan term. You don't want to be paying for equipment that's become obsolete or requires replacement before the finance term ends.
Also consider the tax implications of different finance structures. Some options allow you to claim the full equipment cost as a tax deduction, while others provide depreciation benefits over time.
Making the Right Choice for Your Business
The right asset finance solution depends on your specific circumstances, including your cash flow requirements, tax situation, and long-term business plans. What works for one business may not suit another.
This is where professional advice becomes valuable. Experienced Asset Finance Brokers can explain the pros and cons of each option and help you understand which structure aligns with your business goals.
Whether you're a sole trader needing a work vehicle or a large company requiring factory machinery, there are finance options designed to meet your needs. The key is finding the right lender and structure for your situation.
Don't let equipment costs hold back your business growth. With the right finance partner, you can access the tools and machinery you need while maintaining healthy cash flow for day-to-day operations.
Call one of our team or book an appointment at a time that works for you to discuss your asset finance requirements.
