No matter your industry, almost every business requires equipment to operate. Having the right equipment, whether that be the latest computer software or an efficient delivery vehicle, can be the difference between staying competitive in an ever-changing and increasingly challenging global market. One of the best ways to grow a business is to invest in new equipment and assets that improve your processes and the value of the output you can deliver to your customers. The main problem with this growth avenue is that new equipment is expensive and, like many investments, will rarely produce immediate results.
This problem is particularly prevalent in the current uncertain economic environment, as COVID-19 impacts our ability to forecast operating conditions and therefore, corresponding capital expenditure. As such, affordable solutions to procuring new equipment are becoming increasingly attractive. Equipment finance a financing solution that allows your business to purchase and make use of a commercial asset immediately while paying it off over time. The asset is secured against the loan, making it a preferred financing option to unsecured loans in many circumstances. With that in mind, here are five ways equipment finance may benefit your small to medium business.
Support your business’s growth
One of the biggest challenges small businesses in Australia face is adequately managing their cash flow. According to a recent Intuit study, almost half of small business owners reported they were at risk of being unable to pay their employees. Furthermore, they lost transaction opportunities worth $5.8 billion due to insufficient cash flow. It’s incredibly challenging to grow your business if you don’t have the cash flow to do it.
“Equipment finance reduces the initial outlay you would otherwise need to procure commercial assets”
Intuitively, you’ll need to purchase new equipment and productive assets to facilitate increased orders, deliveries or manufacturing requirements. Equipment finance reduces the initial outlay you would otherwise need to procure these commercial assets. Instead of buying the equipment outright, you can pay the equipment off over time. Better yet, no GST is paid on the repayments, and you gain ownership of the asset from the start of the loan.
Potential tax benefits
Utilising an equipment finance solution may offer taxation benefits for your business. There are multiple types of commercial asset funding solutions, each with their unique advantages and limitations. It’s worth checking with your accountant to see which options would benefit your business the most.
In general, most small businesses will be able to claim back input tax credits in relation to the GST included in the purchase price of the equipment. Furthermore, the depreciation and interest charges are tax-deductible, increasing equipment finance’s viability as a funding method.
Gain access to the latest technology
Do your staff complain of slow laptops? A dodgy printer? Having the latest in technology can make a significant difference to your business’s productivity. Small businesses often struggle to afford the technology that is more easily accessible to their larger counterparts. Depending on your industry, this can make or break your competitiveness in an agile and fast-moving business landscape where every ounce of productivity counts.
“Instead of waiting, your business can start utilising the improved assets immediately”
Equipment finance allows you to purchase the advanced equipment and commercial assets your business needs today, not next year. Instead of waiting, your business can start utilising the improved assets immediately, potentially earning back part or all of the extra repayments you’ll need to make.
Equipment expertise and disposal
A bonus advantage of engaging an equipment financier is that they’re experts at what they do. Many lenders use their own equipment and commercial asset experts who can work with your business and broker to find you the best choices for your situation. Also, they can often take care of your old equipment, selling or disposing of it in a hassle-free manner. Equipment lenders may also partner with manufacturers to provide specialist solutions at rates you won’t find anywhere else.
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 me a call.
