Equipment finance refers to a range of versatile funding solutions that make it easier for your business to own and operate necessary equipment. Equipment finance has many benefits, including no upfront capital expenditure, preserving your working capital position. Furthermore, it allows you to access and upgrade commercial assets earlier than you would have been able to otherwise. Unlike a traditional business loan, the financing term will typically be much longer, and the repayments will usually be lower, less frequent and more flexible. Since the commercial equipment will be used as security, the overall interest rate and fees will often also be less.

Growing your business and upgrading your equipment should not be out of reach. With equipment finance becoming increasingly popular and accepted as a financing solution, it’s worth your time to consider how making use of it may benefit your business. There are many types of equipment financing products and use-cases. In this article, we break down four typical applications for commercial asset finance and explain the benefits, no matter what industry your small to medium business (SME) operates in.

Business Car and Truck Finance

Commercial vehicles, such as cars and trucks, are some of the most common purchases a business will need to make. Supplies need transportation, goods need to be delivered, and services are often rendered in person, requiring transportation. Many SMEs, such as the construction industry, rely heavily on commercial trucks and utes to transport their equipment and operate their services. One of the most popular methods to finance cars and trucks is fleet vehicle leasing through products such as novated leases. The novated leasing market is approximately worth $3 billion and is growing every year as more businesses see the benefit of leasing instead of owning depreciating vehicles.

In addition to allowing you and your employees to access a new commercial vehicle or fleet, business car and truck finance can also extend to vehicles you already own. A sale and leaseback agreement can help your business free up working capital by having a lender purchase your existing business cars or trucks and leasing them back to you over an agreed period. You may be able to repurpose these funds to access new opportunities that you otherwise wouldn’t have had the capital for or to meet necessary operating expenses such as employee wages.

Construction Equipment Finance

Has your construction firm ever lost work or bids due to lack of available equipment or machinery? Like many others, having access to critical capital goods is essential to growing your business and serving your customers. Fortunately, there are many equipment financing products to make accessing these assets easier.

“Finance leases are excellent for SMEs not wanting the headaches of owning or disposing of machinery”

A finance lease allows you to make use of machinery and equipment while not technically owning them. The lender will purchase the equipment on your behalf and lease it to you over an agreed term. This option is excellent for SMEs not wanting the headaches of owning or disposing of machinery. Commercial hire purchases are similar to finance leases except that after the lease period, you will take ownership of the asset. As such, your repayments may be higher over the term. Sale and leaseback arrangements can also be used to free up capital held in recently purchased machinery or equipment. Consult your trusted business finance broker to discuss which options may be best for you and your business.

Technology and Software Finance

Did you know you can financesoftware? It’s true – as the world becomes increasingly digital, your business’s technological competitiveness is more critical than ever. Your digital backbone is crucial to how well you can serve your customers in the always-on economy. Just as cloud computing and storage is replacing fixed onsite databases, your office can also outsource ownership or the upfront costs of purchasing new technology, such as computers, laptops, printers and software. Using equipment finance to secure new technology assets today and not next year may be a gamechanger for your SME, allowing you to compete toe-to-toe with larger organisations.

Hospitality, Restaurant and Cafe Equipment

While pubs, clubs and cafes are set to reopen over the coming weeks and months, SMEs in this industry have been hit hard by COVID-19 restrictions. Stabilising your business during this challenging time has undoubtedly been a challenge, let alone planning the prospect of growing your operations into the future. Traditionally, a significant fixed cost associated with operating or expanding a restaurant or cafe is the equipment and appliances used to cook and serve your produce.

“Gain the flexibility to use, but not own, commercial kitchen equipment – upgrading when required”

Equipment finance allows you to secure the latest machines, ovens, freezers and point of sale systems while preserving working capital to continue running your business. Finance leases and commercial hire purchases are standard financing solutions for hospitality assets, giving you the flexibility to use the commercial equipment over a few years and then upgrade when required.

Capital Plus Finance is an experienced equipment finance broker that has your best interests at heart. Our team will do everything we can to help you secure a suitable commercial asset or equipment finance solution for your business. If you need further assistance understanding the benefits of equipment finance and how it can work for your small to medium business, please give us a call.