Starting a new business is exciting time for most of us. One of the most important things while starting a business is to understand on how the business finances will work. It is a common question for small business owners on how to get hands on the equipment required to grow the business, while still keeping the all-important cash flow and working capital at healthy levels.
Choosing the right asset and equipment finance is very important as it can give you further benefits than just preserving the day-to-day funds.
Some of the benefits of asset finance are:
- Assets and equipment can generate immediate income
- Finance can help preserve working capital
- Fixed repayments may give you the ability to budget more accurately
- The asset secures the loan, in which case you don’t have to lock up your property security which can be preserved for future finance such as working capital
- There may be potential tax advantages to consider
What Asset Can be financed?
Any asset, plant or equipment that can help generate income for a business may be able to be financed such as:
- Motor vehicles for the business
- Commercial fleets.
- Plant and machinery.
- Agricultural equipment.
- Solar power equipment.
- Computers, photocopiers, and phone systems.
- Medical and dental equipment.
- Office equipment.
- General business equipment.
- Internal fit-outs.
What are the different types of Assets and Equipment finance?
There are many different financial products available in the market- some are more popular than the others. It is recommended to discuss with professional advisers, such as accountant about which product may be most appropriate for your business needs.
The options includes:
- Commercial Hire Purchase.
- Chattel Mortgage.
- Finance Lease.
- Operating Lease.
Commercial Hire purchase
A Commercial Hire Purchase is a commercial finance product where the customer hires the vehicle from the financier for a fixed monthly repayment over a set period of time. The asset is not owned until the final payment is made.
Chattel Mortgage
In Chattel mortgage, the asset belongs to the borrower from the beginning and the lender has a ‘charge’ over the asset that secures the loan until the final payment has been made. There may be tax benefits for the borrower because the borrower holds title to the goods. It is recommended to get the right advice from an appropriate professional adviser on choosing the right type of asset finances for the business.
Finance Lease
In Finance Lease, the lender purchases the equipment outright and the borrower gets to use the equipment for the term of the lease in return for lease/rental payments. Under a finance lease the borrower traditionally doesn’t need to outlay any working capital and may also be eligible for tax benefits.
Operating Lease
An operating lease is a contract that allows for an asset’s use but does not convey ownership rights of the asset. These leases allow businesses to use the asset without incurring the high expenses involved in purchasing it.
Why Should You Approach a Broker?
As a broker, a common question we get from small business owners is on how to get hands on the equipment required to grow the business, while still keeping the cash flow and working capital?
The good news is that any asset, plant or equipment that can help generate income for the business may be able to be financed and there are a number of different solutions out there to consider. Brokers are like one stop shop, with access to more than 50+ products in the market.
The news gets better again. When it comes to asset and equipment finance, there are also number of benefits over and above just than preserving the day-to-day funds. It can allow the business owner to use the assets to generate immediate income, budget more accurately, secure the loan with the asset so t is not required to put the property on the line. Apart from this, there may also be tax advantages that may be applicable to you.
If you’d like to find out how this type of finance may be able to help your business, and which option may be the right one for you, please call Aman at +61412175700 or Mandeep at +61401960882 from Credit Hub Australia now to discuss your requirements. With over 20 years of experience in the industry our specialist relationship managers will draw upon their extensive knowledge and experience to obtain more than just a great finance package for you. Our relationship managers will help you in streamlining your banking needs with the best product available in the market that will maximise cash flow of the business and unlock future opportunities.
Alternatively, to reach Credit Hub Australia you can also talk to our friendly team at 1300 782 944, send us a note at info@credithub.com.au., visit our website https://www.credithub.com.au/ and leave your details and we will get back to you. You can also reach us through Facebook with the following link https://www.facebook.com/credithub/.