If your business needs new equipment, finding the capital to buy new items can be a challenge.
Be it machinery, vehicles, tools or technology; these assets can be essential to growth. However, making such an investment can, in fact, handicap you in the short-term, halting cash flow and reducing your flexibility.
Business finance products such as asset finance, business equipment loans and equipment leases can be savvy solutions to finance investments into equipment, and that’s what we will tell you about in this article.
We will hone in on each type of product, because they come with their own advantages, depending on your business goals and circumstances.
Asset finance
The first option is asset finance. This is a simple way to acquire new equipment, and involves spreading the cost over fixed monthly payments. The equipment itself usually acts as security for the loan – this means approvals can be quicker and easier compared to unsecured borrowing.
You’ll find different types of asset finance. These include hire purchase or finance leases, and the type determines whether you own the equipment or simply use it for a set period.
Business equipment loans
Next, let’s talk about business equipment loans. In essence, they are a traditional loan, but one that is specifically designed for purchasing equipment. You borrow the amount you need and repay it over an agreed term with interest.
Equipment loans can be preferable when you want full ownership from the start. As the asset you’re buying can be used as collateral, you might find your lender offers more competitive rates. It’s a clear and predictable option.
Equipment leases
Owning the equipment may not be a priority for your business. And you might also be concerned that the equipment may become outdated quickly (this could be especially relevant in sectors with fast-moving tech such as manufacturing, IT and medical services). In these cases, an equipment lease may make the most sense.
So those are three options for finance your business could use when buying equipment. As we’ve discussed, the best choice will depend on your immediate priorities as a business, as well as the sector that you operate in.
