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