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.
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 =
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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.
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.
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).
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.
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.
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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