Which Asset Finance Option is Right for Your Business?

Asset finance can help businesses in many different ways. Your business may be in a position where it may need to acquire capital to help grow, to help with cash flow , upgrade equipment , improve tax outcomes, you may need a new vehicle or fleet. A business may also need a shop fit-out for shop front or machinery so it can take on larger projects and improve productivity.

As there are a number of options out there, it is very important that you carefully consider which is right for your business.

These are just a few of the options available:

  1. Chattel Mortgages

    A chattel mortgage is a popular option used by both businesses and individuals who use their asset for predominate business use 51% or more. One of the reasons a chattel mortgage is an attractive option is because you own the asset from the very start. The loan is secured by the asset itself. This loan type gives you some flexibility to cater for your needs with a balloon option to reduce the monthly payment as well as the option of having a deposit up front to reduce your amount financed.

    If you or your company make annual motor vehicle claims, a chattel mortgage allows you to claim tax deductions and GST credits if you’re GST registered, significantly reducing your running costs.

  1. Finance Leases

    Unlike a chattel mortgage, with a finance lease you don’t own the asset, the lender does. Businesses usually like this option when they don’t want to tie down their capital towards a vehicle or equipment. Although the lender owns it, the borrower bears the risk of disposal once the lease is up. There is always a residual value. The Australian taxation office sets the size depending on the loan term and asset use.

  1. Commercial Hire Purchases

    A commercial hire purchase is when you hire an asset and continue to make payments until the asset is paid off. Once it has been paid off, the title is transferred to your company name. There is some flexibility in regards to the size of the balloon and the ability to place a deposit.

    There are many different finance options that can help your business acquire the capital, equipment and vehicles it may need. It can be difficult to know which asset finance option would benefit your business the most.

    If you require any further information about these finance options, please do not hesitate to get in contact.