One thing that most small and medium sized enterprises (SMEs) have in common is that their budgets are limited.
That can be a problem, because there are a lot of expenses involved in running a business. You have to think about every-day running costs, such as renting premises and paying wages, but also about finding money for advertising and promoting your business.
Then there is the matter of buying any equipment needed. When it comes to finding the money for that, one option is equipment financing. We offer that kind of financing for many business sectors and this blog will outline some of its benefits.
Preserves working capital
To begin with, there is the fact that it lets you avoid using your own working capital. Paying for equipment out of your company’s financial reserves will seriously deplete them – particularly as you will be paying the entire cost upfront. By contrast, if you secure equipment financing, you will be able to pay back the loan in instalments. This will help with your day-to-day cash flow situation and will allow you to manage outgoings. It is especially important in sectors where equipment is expensive. That is why our engineering business loans are popular.
Access to the latest technology
Another benefit that equipment financing offers SMEs is the chance to access the very latest equipment in their sector. The more cutting-edge working equipment is, the more expensive it tends to be. That can be a real problem if you are trying to find the money yourself. Some SME owners may regard doing without the latest equipment as a solution, but it is a suboptimal one. New technologies can make your business more efficient while also reducing the potential for errors.
Flexible financing options
There is more than one kind of equipment financing available. The options include hire purchase agreements, leases and loans, so your company can select the one that best meets its needs. Furthermore, that is not the limit of the flexibility on offer. Whatever means of financing you choose can be customised to your business, such as seasonal payment structures, for example. This means sectors like hospitality, where business is often heavily seasonal, can benefit from our loan options.
Potential tax benefits
Most SMEs want to find ways of reducing their tax liabilities, because they can be a heavy burden. If you use loan financing for your business equipment, you may be able to claim depreciation and interest payments as legitimate expenses. Choosing a leasing option can be especially advantageous from a tax perspective, as the payments are often fully deductible against your business profits. That is why many accountancy firms choose tailored financing options.
Improved budgeting and financial planning
Paying for equipment with a loan of this kind can help SMEs with budgeting and financial planning. For example, if you are setting up a transport business, you could use one of our transport business loans for purchasing the vehicles. That would be your major outlay, but the loan would have a fixed monthly repayment plan. This means you could be sure of how much had to be paid each month, rather than facing sizeable unexpected costs. This would let you forecast for the future more accurately, allowing you to devise growth strategies.
Increased purchasing power
Using equipment financing has the potential to increase your purchasing power. That can be very helpful for a business like a dentist, where high-end equipment is often costly. We offer everything from leaseback and hire purchase loans for dentists, which allow them to acquire the latest cutting-edge dentistry equipment at a price they can afford.
Faster acquisition
Applying for a standard business loan can be a lengthy process, which is frustrating when you need equipment urgently. Our various forms of equipment financing are usually approved within days though, letting you acquire what you need much more quickly. Therefore, if you are setting up as an architect, you can use our asset financing option to buy 3D printers, CAD software and other essential items.
Safeguard against inflation
The final benefit of equipment financing is as a safeguard against inflation. For instance, your solicitors’ business will have set monthly repayments that are not affected by rising equipment prices or interest rates. That will provide more financial room for growth.
There are a number of benefits for SMEs in choosing equipment financing, making it an option you really should consider.
