When your business needs require you to invest in new equipment, you can scarcely afford to hesitate. But your ability to acquire equipment can sometimes be hindered by a lack of funds, leading you to turn to external finance.
If you’ve never dealt with a finance provider before, you might be hesitant to start now, worried about the prospect of putting the business ‘in debt’ or using up a line of credit. But business equipment financing provides a resource over and above a normal banking facility. As such, it is a useful additional source of funding that provides significant cash flow and tax benefits for businesses looking to finance a new piece of commercial equipment or machinery.
In recent years, commercial equipment financing has grown significantly as more companies become aware of the benefits offered by this flexible, cost-effective, risk-managed form of funding and have looked to find alternative methods of funding to the traditional bank loan.
What are the benefits of business equipment financing?
Business equipment finance has risen in popularity in the last five years, with business owners benefiting from its simplicity and flexibility as a funding method. Agreements can often be drawn up quickly, with providers understanding that companies often need new equipment quickly, either to commence or expand their operation.
This route of financing new equipment is open to businesses of all sizes and industries, with providers often willing to finance a whole range of asset types.
However, providers will offer a number of different business equipment finance options, allowing you to choose one that is best suited to your business and budget accordingly, so that you don’t end up defaulting on the agreement.
All the while, by taking assets off your balance sheet, you are improving your cash flow by keeping your working capital free.
What are the equipment finance options available?
The business equipment finance options available will vary from lender to lender. But the main options for business equipment finance typically include:
Finance lease:
With a finance lease, the finance company buys the equipment you need and leases it to you over an agreed period of time.
Hire purchase:
Commonly used for car finance, hire purchase enables you to spread the cost of your asset over a period of time (the agreed duration of the lease) and then have the option to purchase ownership title at the end of the lease.
Sale and leaseback:
A sale and leaseback agreement is when a business chooses to sell their equipment to the finance company, with the assets then leased back over an agreed period of time.
Business equipment finance options provide a regular payment plan, which reduces the financial impact on both working capital and cash-flow, helping to make your equipment investment more cost-effective.
To find out more or to discuss your finance options further, give Shire Leasing a call today on 01827 302 066.
