Equipment finance is simply a loan specifically obtained for the purchase of a vehicle or equipment, also known as a lease, hire purchase, or chattel mortgage. Equipment finance is secured against the item you purchase.
Most businesses need to acquire capital equipment in the normal course of operating. This equipment could include computers, vehicles, trucks and trailers or any other form of specialised equipment. Without equipment funding, businesses would need to use their own cash for the purchase. The need to acquire equipment for many businesses occurs during periods of growth, where cash can be stretched and paying thousands upfront can be challenging.
Business equipment loans are commonly used among business owners because they:
You can rest assured our team will secure the right equipment finance loan for your business. No matter the industry you’re in, our team have you covered, with experience in:
As with most business choices, the right solution is a tailored one. Get in touch with a member of the Whiteroom Finance team to discover the options available for your business.
Book an obligation free consultation with a member of the Whiteroom Finance team.
A chattel mortgage is a loan in which the value of the item being purchased is used as security against the loan. This loan type is common amongst business owners, as once the chattel mortgage is approved, you will own the asset outright.
A finance lease involves the Lessor (finance organisation) purchasing the item and the Lessee is then required to make payments to the lessor. The asset is registered in the name of the Lessee and the Lessor agrees to sell the asset to the Lessee at the end of the lease term for a pre-determined amount. The Lessee does not own the asset until they purchase from the Lessor; this may enable the full lease payment to be expensed.
A novated lease is a Finance Lease where a third party (normally an employer) makes payments on the Lessee’s behalf. Typically this may be applied where you are able to use of a vehicle under a ‘salary sacrifice’ arrangement. While payments are made by your employer, responsibility for repayments lies with you and you will need to consider the tax implications involved, such as Fringe Benefits Tax (FBT).
An operating lease is a Finance Lease where the cost to maintain the equipment or vehicle is included in the monthly payments. The repayment may include things such as fuel, servicing, tyres, insurance, and any other costs incurred to own the equipment.
Hire purchase is similar to a chattel mortgage as the responsibilities of ownership fall with you. However, a hire purchase involves owning a greater percentage of the asset as each repayment is owned. For example, if there are 60 equal repayments, with each payment you own one-sixtieth of the asset. This means you claim 1 sixtieth of the GST (goods and services tax) with each repayment until the final payment when you own the asset.
The leasing calculator will help identify the monthly repayments you will be required to make depending on the cost of the asset.
We recently assisted a client to purchase a new machine for their engineering workshop in Perth. They had been outsourcing their machining needs for some time but demand had grown and the cost of outsourcing exceeded the cost of acquiring the plant and providing the service themselves.
A suitable asset was identified in NSW and funding sought but during the process, the client discovered the plant couldn’t operate without a dedicated generator, so a second loan was sought to purchase one. Both equipment loans were increased slightly to cover the cost of freight.
The equipment loan type meant the client didn’t need to contribute any payment upfront. It also allowed us to arrange for the GST to be repaid in full after 4 months. This meant the client didn’t have to find the cash to pay GST upfront but could defer until they received their ITC (input tax credit), further assisting them to acquire the asset without strain on cash flow.
Overall, the client acquired a new plant without any immediate impact on cash flow. The acquisition reduced costs of outsourcing, improved efficiency and grew revenue by allowing them to offer expanded services to their clients.
(Disclaimer: details including amounts and repayments are demonstrative only, funding is always subject to lender decision and terms)
Our clients range from single-operator businesses to large commercial enterprises. For these clients we have funded:
Our extensive panel of equipment finance providers include specialist financiers, second-tier lenders, and the major lenders
At Whiteroom Finance, we get to know you and your business by asking you and your advisers the right questions. That’s why we can recommend the appropriate equipment finance solutions. Potentially, saving you thousands or helping you make more.
Can you afford to not ask the right questions when considering equipment finance for your business?
Download our guide to equipment finance. The handy guide will walk you through all the questions you need to ask when considering if equipment finance is the right option for your Perth business.
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Whiteroom Finance Pty Ltd ACN: 609 854 300 is a credit representative (484180) of QED Credit Services Pty Ltd (Australian Credit Licence 387856).