Understanding Equipment Finance for Contractors
As a contractor, your success depends heavily on having the right equipment to complete projects efficiently and profitably. Whether you're buying new equipment or upgrading existing equipment, accessing the right finance options can make the difference between winning contracts and missing opportunities.
Equipment finance provides contractors with the capital needed to purchase essential assets without depleting working capital. This financing solution allows you to spread the cost of equipment purchases over time while maintaining healthy cashflow for day-to-day operations.
Types of Equipment You Can Finance
Contractors can access equipment finance for a wide range of business assets:
• Heavy machinery: Excavators, dozers, graders, cranes, and other specialised machinery
• Transport equipment: Work vehicles, trucks, trailers for moving equipment and materials
• Office equipment: Computers, printers, software, and administrative tools
• Factory machinery: Manufacturing equipment and production line assets
• Industry-specific tools: Specialised equipment tailored to your particular trade
The loan amount available will depend on the equipment value, your business financials, and the lender's assessment criteria.
Commercial Equipment Finance Options
When applying for equipment finance, contractors have several loan options to consider:
Chattel Mortgage
This popular option allows you to purchase equipment outright while using the equipment as collateral. You own the asset from day one and can claim tax benefits including depreciation and GST credits. Fixed monthly repayments help with budgeting and cashflow management.
Hire Purchase
With hire purchase agreements, you make regular payments over the life of the lease and gain ownership once all payments are complete. This option often requires lower upfront costs and provides predictable monthly expenses.
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Book a chat with a Finance Specialist at Secure Me Finance today.
Operating Lease
Leasing arrangements allow you to use equipment without ownership obligations. At the end of the lease term, you can return, upgrade, or purchase the equipment. This option helps manage cashflow by avoiding large capital outlays.
Factors Affecting Your Interest Rate
Several factors influence the interest rate you'll receive on equipment finance:
• Credit history: Your business and personal credit records
• Equipment type: New equipment typically attracts lower rates than used machinery
• Loan term: Shorter terms often result in lower overall interest costs
• Deposit amount: Larger deposits can reduce interest rates and loan amounts
• Business performance: Strong financials demonstrate repayment capacity
The Application Process
The streamlined application process for equipment finance typically involves:
- Initial consultation: Discuss your business needs and equipment requirements
- Documentation: Provide financial statements, tax returns, and equipment quotes
- Assessment: Lenders evaluate your application and determine suitable loan options
- Approval: Once approved, review terms including interest rate and repayment schedule
- Settlement: Complete paperwork and receive funds to purchase your equipment
Benefits of Professional Finance Assistance
Working with finance specialists like Secure Me Finance provides contractors with several advantages:
• Access to multiple lenders and comparison of finance options
• Expert guidance on structuring deals to suit your business needs
• Assistance with documentation and application preparation
• Ongoing support throughout the approval process
• Advice on tax implications and optimal financing structures
Making Equipment Finance Work for Your Business
To maximise the benefits of equipment finance, consider these professional strategies:
Align financing with project timelines: Time equipment purchases with upcoming contracts to ensure immediate revenue generation.
Consider total cost of ownership: Factor in maintenance, insurance, and operating costs when evaluating finance options.
Plan for technology upgrades: Choose financing terms that allow for equipment updates as technology advances.
Maintain strong relationships: Work with lenders who understand the contracting industry and your specific business needs.
Equipment finance enables contractors to acquire the tools necessary for business growth without compromising financial stability. By understanding available options and working with experienced finance professionals, you can secure the right vehicle, machinery, or equipment to drive your contracting business forward.
Call one of our team or book an appointment at a time that works for you to discuss your equipment financing requirements and explore the loan options available to support your contracting business.
