Funding equipment is a viable option that can assist with your client's business cashflow, but did you know that when they finance business equipment under a Specific Security Agreement (formerly chattel mortgage) finance product, they may get access to a range of other benefits too?
Firstly, they (or their business) owns the equipment from the very beginning of the loan meaning that the gear is on their books, they can claim the depreciation on the asset and interest on the loan.
Your clients can choose flexible term structures (usually from 12 to 60 months, sometimes 72) depending on what suits their business cashflow. Additionally this product allows them to have flexible end of term options – either a balloon payment (usually between 10 to 40% of the financed amount) to help keep monthly payments low or alternatively they could choose to not have a balloon payment fully amortising the asset.
They are also able to structure their payments in a way that suits their business – for example if their business gets paid seasonally they can align their loan payments to suit their income stream - having a lump sum payment come out after their income comes in and no payments when they aren’t getting paid.
One of the biggest advantages of this finance product however is that as they are the owner they can fund the GST on the purchase of the equipment which means they can claim an input tax credit upfront.
Your client can then choose what they do with this amount. They may wish to use it for cashflow and to assist other parts of the business, they could also structure it back into their loan repayments thereby reducing their other monthly payments or alternatively they could pay the GST portion as an upfront deposit thereby reducing their borrowings.
If your client is thinking about funding some equipment, contact our lending advisors at Partners Wealth Group on 1800 333 143 to discuss whether this product will suit them and their business needs.