Why You Should Finance Your Business Equipment

November 15, 2017
Graham Evans

The Business Environment

Having the most productive and efficient equipment for your business is important if you want to grow and stay competitive.

It is difficult to pay for any new equipment using savings or business profits. Business equipment can be very expensive to buy. Sometimes in the life of a business you may not even have a choice. That one equipment item that is a key to your business may need replacing without giving you much warning.

Thankfully, your local Mortgage Choice mortgage broker can help you finance all of your equipment needs so that you can grow your business and lead the pack.

Why you should finance business equipment

There are many reasons to purchase new business equipment. It may be that the old asset has run its course and needs updating. It may be that you are expanding and need more capacity. Generally buying new equipment should lead to:

  •    More revenue
  •    Greater efficiencies
  •    Improved quality
  •    Improved capacity / quantity
  •    Savings in other areas of the business (efficiency leading to more efficiency)

The problem is that business equipment typically depreciates quite quickly so it makes sense to:

1)     Borrow the full cost of the new asset and conserve cash flow

2)     Structure principal repayments to match accounting depreciation schedules

The asset you have bought should generate enough revenue or cost savings to not only pay for itself over the term of the finance but contribute to the bottom line profit.

Here are three key reasons why you should finance your business equipment.

1.      Keep your business running and growing

By financing your business equipment, you can preserve cash in the business. Also, you needn’t worry about dipping too much into the company profits or savings, and instead pay for the equipment in a time frame that matches the depreciating nature of business equipment.  Better yet, there is no need for you to save a deposit, and no GST is paid on the loan or the repayments. Unlike leasing equipment, you have ownership of the equipment from the start of the loan. This means you can get on with the important task of successfully managing and running your business.  

 2.      Tailored repayments

Does your business have periods of strong productivity followed by a slowdown? If that is the case, you won’t need to be concerned about not being able to afford the repayments. You broker will be able to tailor your commercial loan around a cash flow forecast for your business. This will stop you from stressing about how you will repay the loan during seasonal fluctuations. The structure of your repayments can be structured monthly, quarterly, half-yearly, annually or via another negotiated time. Payments can also be structured according to the predicted decrease in the equipment’s value and lifespan.  

3.      Tax benefits

Depending on your equipment finance situation, you may be able to earn tax benefits. Your broker and accountant will be able to help you with this.

As you can see, there are many reasons why financing your business’ equipment needs may be the best choice for you, your profits and your company.

So, what are you waiting for? Pick up the phone and speak to Graham Evans today on 0481 833 109. 

Posted in: Business lending

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