Equipment financing can be a strategic way to acquire necessary business assets while preserving working capital. This guide covers key aspects of equipment financing in Australia.
Understanding Equipment Finance Options
Equipment Loan
- Direct ownership of equipment
- Fixed monthly payments
- Equipment serves as collateral
- Typical terms: 2-7 years
Equipment Lease
- Lower monthly payments
- Flexibility to upgrade
- Potential tax advantages
- Options to buy at end of term
Benefits of Equipment Financing
- Preserve working capital
- Fixed payment structure
- Tax deductions
- Stay competitive with current technology
- Avoid equipment obsolescence
How to Choose the Right Option
Consider these factors:
- Equipment lifespan vs. finance term
- Cash flow impact
- Tax implications
- Upgrade requirements
- Total cost of ownership
Application Requirements
Documentation Needed
- Financial statements
- Bank statements (6 months)
- Equipment quotes
- Business details
- ABN registration
Business Criteria
- 6+ months trading
- Minimum monthly revenue $6K
- Clear credit history
- Australian registered business
Cost Considerations
Interest Rates
- New equipment: 4.5-15% p.a.
- Used equipment: 6-18% p.a.
- Rates vary based on:
- Credit profile
- Equipment type
- Loan term
- Security offered
Additional Costs
- Documentation fees
- Equipment valuation
- Insurance requirements
- Maintenance considerations
Tips for Success
- Research equipment value
- Compare multiple lenders
- Understand tax implications
- Review terms carefully
- Consider future business needs
Making Your Decision
The right financing choice depends on:
- Business cash flow
- Growth projections
- Equipment lifecycle
- Tax position
Need personalized advice? Contact our equipment finance specialists for a tailored solution.