When the running of a business, requires you to have substantial pieces of equipment, arranging the necessary finance for their purchase can often prove to be a stumbling block for those starting a new business. Equipment purchase is capital intensive, and when you can arrange the proper finance it enables you to divert your own resources to the actual working capital, that will enable you to conduct your business.
Adequate Equipment Financing Can Help Ease Cash Flow Problems of Running Your Melbourne, Victoria Business
Business equipment finance can be used to purchase both new and used equipment. It can be used to purchase cars, light commercial vehicles, buses, trucks, forklifts, office equipment like printers, copiers and scanners, computing equipment, industrial plant equipment and other manufacturing equipment. Once you have established the viability of your business, you can find any number of lenders and other providers of credit, who will offer to finance the purchase, so that your business is up and running.
You can opt to arrange for lease financing, which allows you to use the equipment, while having all the benefits of ownership. In this system of finance, however, the equipment will belong to the lender, and the equipment can be seized by them in case you do not adhere to the terms of the lease. In a finance method, called commercial hire purchase, the ownership of the equipment or vehicle remains with the lender, while you are allowed the use of this vehicle under certain conditions. The hiring period varies from two to five years, and once you have paid the final instalment as agreed upon, the ownership is automatically transferred to you.
A chattel mortgage form of equipment finance allows you to borrow the amount needed to purchase the equipment and become an owner of it from day one of the time of purchase. The lender secures the loan by obtaining a mortgage on the equipment. In most of these cases, the buyer will have to provide a deposit or arrange for some part of the purchase price. In equipment rental, another form of equipment financing, the lender arranges to buy the equipment, that you may have the liberty to choose, while you agree to pay rent for its use, for a fixed period rarely exceeding five years.
Each of these forms of equipment finance has its own effect on allowable depreciation and costs, and that is why before you decide on any one form of financing, you examine all its likely effects on cash flow and balance sheets. If you are new to the business, take the proper advice from an experienced commercial finance broker who knows all about credit policies and other requirements for equipment finance. Keep your accountants and tax advisers in the picture as they may have their own inputs on tax advantages and depreciation, that can influence your decision. When you are looking for finance lenders, look for those who are experienced with providing finance for the type of equipment that you are wanting to purchase. They may surprise you with their knowledge about equipment that can be of help to you for choosing the right equipment.