Equipment and Machinery, Finance, Finlease

Seven quick equipment finance facts with Finlease

A dog in the cab of an excavator.

After 30 years of financing equipment, Finlease shares a few facts to assist business owners in getting the best outcomes on equipment purchases and finance in 2023.

1. Spreading your equipment debt over multiple financiers instead of your bank can pay big dividends

Often your bank will have a mortgage over your business, known as General Security Agreement (GSA). They will likely consider exposure they have on equipment finance when assessing whether they will provide extra working capital as you grow. Often banks refuse to provide increased home loans or additional overdraft limits, due to the level of exposure you have on equipment finance.

If you want to change banks, the departing bank will typically want to see you pay out all equipment loans prior to releasing securities required by the incoming bank. These payouts incur a penalty on early discharge. You would not have to do this if your equipment finance was with another provider.

SPREADING DEBT =

  •  More competitive rates and terms for you
  •  You’re building a broad base of supporting lenders to provide additional finance
  •  A quicker and more cost-effective way of growing your fleet of machines.

2. Used equipment is as easy to finance as new equipment

Quality used equipment (purchased at auction or via a dealer) is a viable alternative to new, especially in this current environment where supply of new equipment has significant delay in delivery.

3. Private sales of used equipment can easily be financed

Competitive equipment finance is easily available where the used equipment is being purchased from a private vendor.

Private sales require extra steps such as inspection of goods and ownerships checks. Using a skilled broker means they will complete these steps for you.

4. Interest rates can vary by as much as 2 per cent, so it pays to shop around

Interest rates on equipment finance are open to competition between banks and finance companies. It pays to shop around or use a finance broker who will save you time and do it for you.

A two per cent interest rate saving on a $300,000 loan, over five years, will save you $330 a month ($20,000 over the entire term).

5. Finance under $1 million can be completed without financials

Most finance under $1 million can be arranged without the need to provide financials and without increases in interest rates. This is known as Low Doc, Matrix, Easy Upgrade Products.

6. You can take advantage of a 100 per cent tax write off on new or used equipment

This is a once-in-a-generation opportunity for companies to expand. The government Instant Asset Write-off incentives will be ending June 30, 2023.

7. You can claim a 100 per cent tax write off on your existing fleet

Any company using the Simplified Tax System for Depreciation and with a turnover of less than $10 million can claim a full 100 per cent tax write off on their existing fleet.

The loss created can be carried back to prior years (up to 2019) to obtain a tax refund on any tax paid during that term. If you still have tax losses after that, you can carry those forward to offset future years trading profits.

Chat to your broker or accountant to learn how your business can best take advantage of the Instant Asset Write-off incentives.

Find out more at www.finlease.com.au

 

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