Growing your business is an extremely rewarding challenge. But sometimes, in order to grow, you first need to invest–perhaps in new machinery or equipment, or in a business vehicle. In order to take the next step, you need a financial boost. How do you choose equipment finance for your business?
Equipment finance choices
Firstly, it’s important to realise that there are a few kinds of finance options available to you. The most well known is asset finance, where a finance provider gives you a loan to buy the asset. You make repayments on the loan, and the asset acts as security on the loan.
However, this may not suit everyone. Another common kind of equipment finance is a hire purchase, which is similar to the idea of ‘rent to own.’ In this case, you have possession and operation of the equipment, but your finance provider actually owns it. You make regular payments, but do not take ownership of the asset until it is paid off.
A third option is a finance lease. Like in a hire purchase, the finance provider retains ownership of the asset. However, at the end of the lease period, you have the option to pay the outstanding amount and take ownership, or leave it and move on.
Effects on your business
There are other options, too, such as a ‘lease line,’ which is a line of credit that you can use for a range of equipment purchases, or a ‘sale lease back,’ where you sell an asset you own, and then lease it back to keep using it. Each course of action can have different implications to your business balance sheets and tax situation.
Depending on the value of your asset and the financial climate, you may find a range of different offers. A mortgage broker can help you sift through your options and find the best arrangement for your business’ equipment finance. Contact us to get started today.