Equipment & Vehicle

It’s a common question for small business owners; how do you get your hands on the equipment you need to grow, while still keeping the all-important cash flow and working capital?

Choosing the right equipment finance gives you a lot more benefits other than just preserving your day-today funds:

  • Equipment can generate immediate income.
  • Equipment Finance preserves working capital.
  • Repayments let you budget more accurately.
  • Loans are often secured by the asset so usually you don’t have to put your house on the line.
  • There could be potential tax advantages to consider.

What can be financed?

Any plant or equipment that can help generate income for your business can usually be financed. Some examples are as follows:

  • Motor vehicles.
  • Commercial vehicles.
  • Plant and machinery.
  • Agricultural equipment.
  • Computers, photocopiers and phone systems.
  • Medical and dental equipment.
  • Office equipment.
  • General business equipment.

What types of equipment finance are there?

There are many different financial products available with some more popular than others. It is important to discuss with your professional advisers such as your Accountant which product may be appropriate for your business needs. These options include Commercial Hire Purchase, Chattel Mortgage, Finance Lease, Novated Lease, full maintained Novated Lease and Operating Lease. The more commonly used options are Chattel Mortgage, Finance Lease and Novated Lease. We can help you evaluate the key benefits and differences for each product.

Chattel Mortgage

The equipment belongs to you from the beginning and the lender has a ‘charge’ over the equipment that secures the loan until the final payment has been made. The borrower holds title to the goods and there may be taxation benefits. So it’s important to get the right advice from an appropriate Professional Adviser such as an Accountant on how this could best work for you and your business.

Finance Lease

The lender (lessor) purchases the equipment outright. The borrower (lessee) gets to use the equipment for the term of the lease in return for lease/rental payments. Under a finance lease the borrower (lessee) traditionally doesn’t need to outlay any working capital and may also be eligible to claim a tax deduction. You should consult your Tax Adviser about potential tax deductions when considering a finance lease.

Novated Lease for Vehicles

A Novated Lease is a three-way agreement between an employee, their employer and a finance company. The word “Novation” refers to the substitution of a new contract in place of an old one. In other words, the employer agrees to take on the employee’s lease obligations. The employer makes the monthly lease payments out of the employee’s pre-taxable income.

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