Equipment Finance to Grow Your Business

Intro to Equipment Leasing

Equipment Finance Strategies

- Equipment Leasing

- Hire Purchase Agreements

- Business Loans

Summary

Intro to Equipment Leasing

If your business doesn't have the equipment it needs to compete with industry rivals, it might be time to invest in the tools your team have at their disposal.

Having quality equipment can save you time, broaden your skill-sets, and often significantly boost your staff psychologically. On the other hand, old equipment can seriously hold you back, mainly if your competitors invest heavily to improve and expand their offerings.

The problem for most businesses is that, while you'd love to buy a new piece of equipment to improve the way you do things, the reality is that your outgoings can make it nigh on impossible to find the cash to do so. Even if you have the cash lying around, parting ways with a big chunk of money is a risk for any business owner.

So what's the solution? How can you get the equipment you need while keeping your cash flow strong?

Below are 3 of the most popular equipment finance strategies small and medium business owners across the UK use and how they can benefit you.

Equipment Finance Strategies

Equipment Leasing

No matter how big or small the equipment you need, investing a lump sum of money into something is a big decision.

"What if it breaks on me?"

"What if a newer, better version comes out in a few months?"

"What if something happens in the short term and I need the cash to pay my staff?"

Going down the equipment leasing route allows you to have the best of both worlds, keeping vital cash in your bank account while also getting the equipment you need.

Because you’re leasing as opposed to buying, you don’t have to take another line of credit, which massively reduces the risk on your part.

What's more, as your lease agreement ends after a set period, you'll have the option to keep the equipment at the end or upgrade to the newest version, safeguarding your business for the future.

Equipment providers are also there throughout the lease to provide you support with your equipment, so you're never left stranded if there is an issue.

However, the main benefit is that your new equipment is paid for in monthly chunks rather than one huge payment.

There are also tax benefits on top of all this because you can claim the lease expenses on your taxes at the end of the year.

Top Tip

A great way to work out if finance is affordable for your business is to start by working out the average spend.

Then, divide the monthly cost of the equipment lease by your average deal size, and that should give you a rough idea of how many more sales you'll have to make per month to cover the cost of the lease.

For example, let's say you want to buy a new coffee machine to deal with increased demand.

It will cost you £95 per month to lease, and your customer's average spends £5.

This means you'd need to make 19 more sales per month to cover the cost of the new machine.

It isn't this simple, with tax and profit not accounted for, but as a general rule of thumb, this is a great way to look at leasing to figure out if it's a viable option.

Through the different types of equipment finance, you can end up owning your leased assets.

Hire Purchase Agreements

Like equipment leasing, Hire Purchase Agreements allow you to pay monthly for the equipment you need to grow your business. Through the term of the agreement, the lender technically owns the deal.

The difference with this type of agreement is that, once your payments finish, you officially own the equipment. There can be positives and negatives to this type of agreement; technology these days is so fast-moving that sometimes, depending on the nature of your industry, more advanced equipment may be available by the time you've finished paying it off.

Many business owners opt for this type of agreement to ensure they retain the asset come the agreement's end. Another positive is that with Hire Purchase Agreements, you can claim back the depreciation of your new equipment as an expense.

Business owners can go down the route of a business loan for their equipment finance.

Business Loans

The final option which is incredibly popular among business owners is a straight-up business loan. Business Loans are one of the most popular kinds of loans in the UK because they are incredibly straightforward.

With Leasing and Hire Purchase, the lender purchases the equipment on your behalf, and you pay them back on a month-by-month basis. However, a business loan means you'll have the cash in your bank to buy the equipment yourself.

Owning the equipment outright is a huge positive for many businesses, although it does mean depreciation is entirely in your own hands now. If the particular equipment you've purchased becomes redundant due to technological advances, you can sometimes become a little stuck.

Equipment finance can be used to fund a wide range of assets and equipment.

Summary

Deciding which type of finance is right for your business is never easy.

At Love Finance, our job isn't just to grow our own business but to help you make the right decisions in developing yours.

So if you'd like some straightforward advice on which type of finance is right for you, click here, and one of our UK-based finance experts will get back to you.

To apply for asset finance, click here.

Examples of Equipment Finance:

Container equipment finance

Material handling financing

Tanks finance

Conveyor belt financing

Business equipment financing / Business equipment loans / Business equipment leasing / Business equipment loan

Equipment funding / Equipment leasing

Hire purchase equipment

Heavy equipment financing / Heavy equipment financing companies / Heavy equipment loans / Heavy equipment financing rates / Lease to own heavy equipment

Commercial equipment financing / Commercial kitchen equipment finance / Commercial equipment loan

Construction equipment financing

Equipment finance broker

Equipment finance interest rates

Mixer finance

Equipment financing companies / Equipment financing rates 

Farm equipment loans

Small business equipment loans

Medical equipment finance

Trailer finance