Business equipment finance, or leasing as it is sometimes generally known, is a valuable business tool that allows you to manage the purchase of important business assets while keeping your cash available.
In addition to this, there can be tax advantages for your business using this type of finance however, always discuss this with your accountant to check your own personal situation.
Using your accountant in these situations is integral to ensuring you receive the correct guidance on which facility and structure is best for you.
Whether you choose a lease or a chattel mortgage, you will be able to make repayments that suit your business' own unique cash flow situation.
Repayments can be made monthly, quarterly, semi-annually or annually. Repayments can also be made in alternate months.
An equipment finance facility has terms of one to five years and can fit in with the type of asset or business structure you wish to use it in.
For example, if you are going to purchase a tractor and slasher to perform a specific contract of three years, you can then match the finance facility to that same contract.
While you must have a residual value for a lease, having a balloon on a chattel mortgage is optional; you can have a balloon at the start of a facility (when selling a replacement asset) or you can choose to have a balloon at the end of the facility.
There are options for the residual value or balloon at the end of the facility, including payout from the sale of the asset, payout from cash or refinancing of the residual value or balloon, taking into consideration your business strategy and cash flow.
Discuss your business growth ideas with your accountant to find the best choices for you.
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