Equipment financing provides your business with funds to purchase (or lease) the equipment it needs to operate and grow. You can lease almost anything, from IT equipment and air conditioning services to heavy machinery and vehicles. An equipment loan can help you improve cash flow and meet ongoing business expenses.Get working capital
Would you pay your rent several years in advance? Probably not — so why do the same for your business's equipment? That's where equipment finance comes in.
Many businesses depend on equipment to get the job done. And for some firms, new equipment might make the difference between stagnation and growth.
Whatever your sector, there's probably an asset that you'd like to have in your business — and depending on what you do, it could be anything from machine tools and yellow plant to catering equipment or commercial vehicles.
An equipment loan is a type of finance that enables businesses to obtain the technology or machinery they need. Generally speaking, the lender provides the business with finance that is secured by the equipment it’s being used to purchase or hire and the business pays the money back (with interest) in monthly instalments.
The equipment may be used as security, therefore if the business fails to meet the repayment terms the equipment is taken away. As soon as the loan is paid in full, the business owns the equipment.
But what if your business can't afford such big-ticket purchases? Many of these items run into the thousands of pounds, and for smaller businesses trying to grow, big up-front costs just aren't possible.
On the other hand, more established companies often don't want to buy an expensive piece of equipment outright, even if they can afford to do so — because the money could be spent on other things to benefit the business.
There are lots of different ways you can fund large equipment purchases. Here are some of them:
Hire purchase is similar to equipment leasing in the sense that you make regular payments for an asset; but as the name suggests, you're effectively purchasing the item and paying in instalments. The major difference is that it will appear on your balance sheet from the beginning, so it makes sense if you want to have the asset for the long term, or the asset will hold its value well.
Plant equipment finance is all about heavy machinery, machine tools, construction equipment and manufacturing equipment. If it lifts, shifts or has tracks like a tank, you can probably get it with plant machinery finance. Or maybe you need drive-in pallet racking shelving systems for your warehouse? You'd be surprised by the range of specialist heavy-duty items you can finance.
There are many reasons you might choose equipment finance rather than paying up front out of your business's coffers. Here are four of the best:
Some types of equipment finance like equipment leasing and sale and leaseback are more tax efficient than buying outright. That's because when you lease an item it's a monthly expense rather than an asset sitting on your balance sheet.
Easy to budget and manage
Equipment finance in most of its forms gives you predictable payments so you can spread the cost over time. That means that managing cashflow is that little bit simpler, and you can focus on running the business.
Flexibility and scalability
If you finance one piece of equipment and your business starts growing, you can get more items quickly without a large outlay. Whether you're ramping up production using a new piece of state-of-the-art kit, or getting hold of extra vehicles for expanding logistics, equipment finance is a great way to grow your rbusiness.
Access to other lines of credit
One of the often-forgotten but important reasons to finance equipment rather than buy it outright is access to other lines of credit. For similar reasons as tax efficiency, equipment finance is usually a predictable monthly expense, which means you can get another type of business finance alongside it. This is a huge advantage for some businesses — you could get the equipment you need, and take out a business loan for marketing, for example.
There's an almost limitless amount of industries and sectors eligible for equipment finance. We can help you find equipment finance for:
Bar and pub
Restaurant and takeaway
Café, bakery and coffee shop
Events and marquee
Agriculture and farming
Buses, coaches, cars, vans, trucks and haulage
Finance for a garage or mechanic
Laundry and dry cleaning equipment finance
Manufacturing and heavy industry
Office and IT equipment
Racking warehouse equipment and shelving
Refrigeration and air conditioning
One of the advantages of equipment loans is that, if you’re eligible, they are quick to get — in fact, you could be approved for equipment finance in just 24 hours. This is great news for businesses that can’t wait weeks or months to purchase, replace or repair critical equipment. You can use the Funding Options platform to find a suitable equipment loan.
1. To get started, tell us how much finance you need, what it’s for and how quickly you need the funds.
2. Our smart technology will compare 100+ lenders and match you with the right finance options for your needs.
3. A Finance Specialist will help you through the process from application to receiving your funds.
The amount of time you can take out an equipment loan will depend on a number of factors, including how expensive the equipment is, how much it is likely to lose its value and for how long the lender is willing to offer you the finance. It is possible to finance equipment for as little as a year up to seven years, and anywhere in between.