Most businesses need equipment, whether it be office furniture, point-of-sale systems or tools, vehicles and machinery. Equipment Finance means you don’t have to make large upfront payments for expensive equipment for your business.
Indeed there are a number of different types of finance you can use to buy equipment for your business. Choosing the right type of finance will depend on how your business operates. We also need to keep in mind your cash flow and how you like to make loan repayments.
Types of Equipment Finance
- Equipment Leasing
- Hire Purchase
- Business Loan
- Line of Credit
Equipment Leasing
Rather than taking out a loan to buy the equipment, you may opt to lease the equipment. This basically means the lender has legal title over the equipment during the lease period. Obviously you make regular lease payments to the lender. At the end of the lease you can opt to take out another lease. Accordingly, you can take ownership of the equipment.
Hire Purchase
With this type of finance, the lender owns the equipment. You make regular repayments on it until the end of the term when it then becomes your property.
Business Loan
A business loan is a loan you take out for your business for a set amount to spend as you desire on your business. You can use the finance to buy equipment for your business or use it for other business needs and expenses. With this type of finance the lender does not use the equipment you purchase as security for the loan. You make regular repayments on the loan with interest for the term of the loan.
Line of Credit
If you’d like to have ready access to funds to buy equipment for your business, you may choose to get a business line of credit. A line of credit is an ongoing source of funding that can be drawn back down as it is repaid – rather than a lump sum that is paid off. Once you’ve been approved to access a line of credit, you can draw down on part or all of the funds during the term of the facility. You only pay interest on the money you have used, for as long as you use it.
Each type of equipment finance has its own advantages and considerations. Our brokers can give you options of each type of equipment finance to consider. It’s also a good idea to seek advice from your accountant as to what will work best for your business and its structure and cash flow.
Contact our asset brokers today for help with seeking the best equipment finance options for your business.