With the continued advancement of small business lending products, one product offering that is coming to the fore is the concept of equipment rental (or equipment leasing finance). For rapidly depreciating assets such as computers, fits outs etc, a rental product can be a better option for you than a normal loan.
In its simplest form you are renting the equipment / asset from a finance institution:
- You chose the equipment you need
- The finance company buys it
- You rent it with regular payments over a time period e.g 3 or 5 years
- End of Term options include the ability to re-rent, return or purchase
What are the benefits?
- Flexibility and wriggle room – offers clients optionality at the end of term.
- Not on Balance Sheet – This is an expense and not an asset/liability.
- Simplicity – know the cost for a fixed period of time.
- Pay for use – rather than ownership of the equipment.
- 100% Tax Deductible – Payments are operating costs therefore are completely tax deductible – We like this benefit!
- Freedom from obsolescence – don’t tie up capital on assets that need periodic replacement or may not suit the application.
Every business is different
As we continue to harp on, every business (and business owner) is different and has a different situation. A fair bit of analysis and strategy is required to see if this product suits your needs.
So all we can recommend is give Steve a call on 0407 722 211.