Not all businesses, especially those at the smaller end of the scale, have the available finances to purchase the expensive equipment they need outright. In fact, investing this level of capital in equipment could have a serious negative effect on cash flow. Even for larger and more established businesses, dipping into capital reserves for equipment upgrades can present challenges. However, there is a type of SME business loan specifically aimed at helping businesses access the equipment they need without having to jeopardise their immediate financial future.
They’re called business equipment loans and they are designed to enable businesses to purchase equipment and machinery on credit, usually via an operating lease, hire purchase or finance lease basis. These three types of equipment loans vary in terms of repayment methods and terms but all are generally designed to allow businesses to pay for vital equipment through monthly repayments with interest added. The equipment itself is used as security, so if payments are not made this can be taken back by the broker. But the general principle is that more efficient equipment leads to higher turnover and increased revenue, allowing businesses to make the repayments.
There are a number of key benefits when taking out a business equipment loan, compared to other types of financing options. These can include:
Equipment can be very expensive, especially in sectors such as manufacturing, construction or farming. Loans allow you access to the machinery you need, while preserving cash flow by spreading costs over time. This keeps funds available for other operational needs and emergencies and allows businesses to spread the cost over more affordable repayment periods.
As the equipment itself serves as security, these types of loans often have a simpler and faster approval process. Being a simple process also makes it easier for many businesses to qualify. Once the application is made and approved, you can often have access to the equipment you need within a matter of days.
There are various types of equipment loans, some of which could more accurately be described as a lease option. Loans are generally better for long-term equipment needs and ownership. Leases, on the other hand, are more suitable for short-term use or when evolving technology requires businesses to stay up to date with new technology.
The interest payments and depreciation on financed equipment can often be deducted as business expenses. This provides significant tax advantages, which can in turn be used to offset the cost of acquiring new equipment. This makes equipment financing a more financially feasible option to boost operations in both the short and long term.
You can start benefiting from new equipment right away, allowing for a boost in productivity and turnover. All the while you are deferring payment until such a time that it becomes more affordable.
Apply for a business equipment loan or speak to a member of our team about your equipment financing options. Boost productivity and competitiveness, maintain cash flow and get access to the equipment you need to move your business forward.
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