In Australia, where the economy is one of the most thriving in the world; it’s still not unheard of for new businesses to struggle to make ends meet. With the costs and expenses associated with managing and maintaining a company; from employee salaries, right through to overheads and much more in between – 1 in every 5 new companies end up going into liquidation every year.
And this is part of the reason why many financial brokers and experts are suggesting new business equipment finance; an option that is available to new companies that could stand to benefit from financial support from a lender; without having to use their own money to cover the initial costs.
How does it work?
In a nutshell, most new businesses simply won’t have the assets and financial capabilities to ensure their growth into the future.
Those that turn to their own funding will often spend the next year walking on a knife’s edge – with some agencies having no other option than to fold under the pressure and liquidise their assets. In these cases it can make more sense to secure a loan from a bank or lender, use the cash that they can provide to cover the cost of equipment and facilities, whilst retaining cash flow for a rainy day.
Most lenders will be willing to provide their cash under particular agreements; such as with a secured loan, or a chattel mortgage. Regardless of the option that the borrower chooses, they will typically be able to receive the influx of cash to be put toward their equipment and then repay what they borrow over a period of time that suits their financial situation.
What can be purchased with equipment finance?
Although some lenders might be a little picky when it comes to the types of equipment, machinery and facilities that they will lend money to purchase; most will be content with proof that the borrower can repay what they intend to receive, with interest. In these cases the option to purchase almost anything for professional purposes can be readily available.
Some lenders may choose to retain ownership of an asset or piece of equipment until the entire loan has been paid off. Others will make options available that are similar to mortgages and where the borrower will own the equipment as long as they meet their repayments. There are even options that can allow leasing terms to be reached and agreed upon – making it easy for a borrower to enjoy their equipment for as long as they need it, and then end the lease and allow the bank to sell the asset to receive their initial investment back.