Do You Need New Equipment But Lack The Capital?

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- 13 Apr 2017 ( #816 )
4 min read
Fund your business vision
Fund your business vision
One of the fundamental expenses that goes into running any business is that of purchasing equipment. Whether it's cars, computers or complex industrial machinery specialised to your industry, almost every company needs to invest in equipment at one point or another.

The challenge is making this investment without sacrificing any other aspect of your daily operations. For example, if you need $150,000 to invest in an integral piece of equipment, that's a huge chunk of change, and you don't want to take away from paying your creditors or employees' on time, just to make ends meet.

This is where equipment financing can save the day. David Wright, Senior Relationship Manager at Classic Funding Group outlines the finance options for purchasing equipment to keep your business humming along.

Equipment finance brings key advantages
"When you need to come up with the money for equipment, there are several advantages to working with a non-bank lender, such as Classic Funding Group. You're likely to have faster responses, better customer service and will not need to put your personal property up as security" explains Wright. "Furthermore, there might be less restrictions on the age and type of asset you are looking at acquiring, giving you more options" Wright elaborates. These types of tangible benefits may be worth seeking out.

Cash flow is always a priority
"Some business owners look only at the bottom line when managing their finances - as long as they earn more money than they spend in the long run, everything is fine" says Wright. "The thing is, sometimes purchasing equipment out of capex budgets puts undue pressure on cash flow in the short term" continues Wright.

According to The Guardian, it's important to focus on cash flow rather than profit alone, because you always need to have working capital to run your business.

For this reason, it makes sense to have a source of funding available that's quick and reliable. You don't just want the money for your equipment whenever - you want it now, so you can keep investing in infrastructure without sacrificing any of your other short-term priorities.

"In choosing an equipment finance lender, consider whether they offer fast lo-doc finance options, an ability to be pre-approved for a master facility and whether they have the ability to execute finance contracts electronically, as this will substantially speed up the process when it really counts" continued Wright. "For example, Classic have "No Financials" Equipment Finance options, we can pre-approve eligible businesses within hours and have the ability to sign documents electronically for a fast and easy settlement" concluded Wright.

Keep your technology current and your money moving
To stay successful in business, you need equipment that's up to date. If you're working with outdated technology, you risk squandering productivity and losing business to other, more modern companies on the market. Therefore, you need financing that will keep you constantly staving off tech obsolescence.

"To keep your equipment current and suitable for your business, you need to have the flexibility of being able to add additional equipment to your finance contract when your business needs change, and upgrade existing equipment at the end of the term" explains Wright. "This way, you can keep investing steadily with no worries about what the future might bring. It is one of the advantages of acquiring equipment on an Operating Lease (Rental), another advantage being that repayments are 100% tax deductible" concludes Wright.

When ownership is key
"For equipment with long life spans or when the equipment needs to be on balance sheet, businesses often choose to acquire the assets on a Secured Loan", explains Wright. "Commonly known as a Chattel Mortgage, the arrangement grants ownership of the asset to the company from the outset, and the financier takes security over the asset until it is paid off", concludes Wright.

Using a Secured Loan, eligible small businesses may be able to take advantage of the Federal Government's Accelerated Depreciation budget measure to acquire required assets under $20,000 before 30 June 2017 and immediately depreciate them.

Should you require equipment now or in the future, and would like to discuss finance options, please get in touch with us!

Classic Funding Group
David Wright
P: 1300 780 895
E: send an email
W: website


The information provided is of a general nature and it is recommended that you obtain your own financial advice for any finance solution you choose.
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