7 quick facts you need to know about equipment finance in 2023

After 30 years of financing equipment, we thought we’d share a few need-to-know quick facts to assist business owners in getting the best outcomes on equipment finance and purchases in 2023.

 

1. Spreading your equipment debt over a number of 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). Which means in laymen terms that they have a mortgage over your entire business.

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. This is not the case where that equipment is financed elsewhere.

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 & more cost-effective way of growing your fleet of machines
• Faster finance approvals, often without the need to provide financials.

This 90 second video will explain it all:

 

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. In most instances, the interest rates on Used Equipment is similar to New.

 

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 & ownerships checks. Using a skilled broker means they will complete these steps for you.

 

4. Interest rates can vary by as much as 2%, 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 & will do it for you.

A 2% interest rate saving on a $300,000 loan, over five years, will save you $330 a month ($20k over the entire term).

 

5. Finance can be secured without the need for financials

Finance for assets under $500k can often be organised without the need for financials. If you’re looking to replace existing assets under finance, we can organise up to $1 million without requiring financials.

 

6. Enhance your cash flow management

Equipment finance can improve a company’s cash flow. The set terms and monthly payments help forecast cash flow more accurately, allowing for better financial planning and budgeting.

 

7. Save time & resources by utilising a broker to do the work (and paperwork) for you

Choosing a broker over a bank offers a seamless and personalised experience, as brokers have extensive lender networks, negotiate on your behalf, handle the paperwork, and provide expert guidance. All of this can be provided at similar interest rates to your bank & often at better rates.

 

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