How to Finance Your Business Equipment

Business owners have many finance options when needing new equipment. These days, there are many types of financing available for  equipment purchase.

Equipment Finance

Provides business owners with funding, with no upfront costs. Equipment finance allows you to receive the required financing from a specialised lender or bank. 

This financing scheme enables you to repay the loan with a set repayment schedule. You get ownership benefits right away and pay for the machinery over time. If you need the equipment now then this is a good option.

Business owners can look into several financing options to find the deal that best suits their needs.

Business Loans

Secured and unsecured business loans can provide from $5K to $1M+ in business financing. You need to qualify for these loans.

Some lenders don't have specific borrowing limits. This is helpful for borrowers who need access to more significant amounts of funding. Depending on the terms of the business loan, payments on business loans repayments could be daily, weekly, or monthly.

Hire Purchase

This arrangement is another way to buy costly business equipment. In hire purchase, the buyer pays a down payment and the remaining balance, including interest, gets paid in instalments. When using hire purchase you may be able to claim GST and depreciation.

Finance Lease

An useful option is a finance or capital lease. There is an intention to own the equipment at the end of the lease. This means that you can claim interest payments and depreciation against tax. There is often a balloon payment at the end of the lease.  

Chattel Mortgage

This option works in a similar way to a mortgage. The lender secures the lone on the equipment. This means you own the equipment and can depreciate it over time. GST registered businesses should be able to claim back the GST in the normal way.

What To Consider When Taking Out A Business Equipment Loan

It's a good idea to evaluate all the different options. One may suit your business. Look at the advantages and disadvantages of the loan types you're considering. Tax implications can be significant. Take professionsal advice for your specific circumstances.

Some lenders may add origination or other types of fees to process or manage your account. Always read the fine print. Ask the loan provider to explain any extra charges you could see on your statement. 

By understanding all the fees, you can avoid misunderstandings or confusion later. Check interest rates across all offers to find the most favourable loan product. It's the whole package that matters, so look at the big picture.