When buying equipment there are many options available to you when it comes to financing your purchase, however, these options are not always as straight forward as you think.
Here are some questions that our team of Finance Executives are regularly asked when it comes to equipment finance:
1. Can I Finance 2nd hand equipment?
Yes, most 2nd hand equipment is able to be financed, however, the age and class of the equipment may impact the term and structure of the loan and in some very rare cases preclude funding.
2. Can I finance equipment from a private supplier? If so, are there special precautions that need to be taken?
Yes, private sale equipment can be financed and It’s vitally important that various aspects are covered to ensure that you are protected. For instance, we liaise directly with the party selling the equipment seeking proof of ownership in order to satisfy ‘title flow’, as well as check for any existing finance against the equipment – making sure this is paid out at settlement. Additionally, a PPSR check is conducted to ensure that any encumbrances that may exist are removed.
3. Is it possible to “structure” repayments to better suit my cash flow?
Yes, payment terms are usually monthly in arrears, however they can be restructured to better suit your cash flow. For example, businesses in agriculture and other seasonal based industries, are paid annually, so their repayment period can be structured to suit. In most cases, we can finance the GST inclusive price and you can pay the GST as a lump sum when you receive the benefit via your monthly or quarterly BAS.
4. What if the equipment I want to purchase is being constructed in Australia, and the supplier requires “progress payments”?
Construction Funding is possible in certain circumstances and allows for “progress payments” during the construction phase (similar to a new home build), which can then be converted to an equipment loan once the construction of the equipment is complete. This preserves your cash flow, which is vital, given that the equipment isn’t income producing until delivered.
5. Can I fund a portion of the equipment cost – or do I have to fund all of it?
Yes, you are able to fund a portion of the cost or the total cost of the equipment – it’s entirely up to you and your situation.
6. What are the contract terms?
The contract terms are flexible and generally range from 2-5 years with a balloon/residual payment if required. In rare cases, loans can be extended to 7 years and sometimes up to a maximum of 10 years dependent upon the type and class of asset.
7. What security is required?
Security for equipment is generally standalone against the equipment itself as well as directors guarantee. No other collateral security or GSA is required.
8. How long does the process take?
Once we have received everything required, the pre-qualification process of most transactions is completed within 1- 2 business days. On approval, we will then issue the final documentation inhouse and when the equipment is ready for delivery and we have signed documents to hand and all settlement conditions have been met, we can settle with the supplier.
9. Why should I use Ledge instead of going straight to my bank?
At Ledge, we pride ourselves on building strong relationships with our clients to better understand their business. Because of the large volume of business we transact, we have developed strong relationships with most banks and financiers, which gives us access to competitive pricing and T’s and C’s that clients may not be able to access directly. We know which lenders to approach for particular transactions and we have the knowledge and experience in putting proposals to lenders in a format that is easier for them to assess.
10. How will financing equipment benefit my company?
Quite simply, it conserves your cash for use elsewhere in your business or as an additional working capital buffer.
In summary, having the right equipment and assets are crucial for the growth of any business. At Ledge, we provide many different financial solutions to suit your business needs, providing you with the capital to meet your growth strategies.
If you have any further questions, please contact us on 6318 2777 or email email@example.com