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Choosing the Right Business Equipment Finance

The right equipment in the right hands can do wonders for your business by helping it be more productive and profitable.

Often times the obstacle to getting to this stage is financial – not having the available cash flow to invest in equipment. But there are ways around it – business equipment financing. It can be used for a variety of business equipment and sometimes can be used to purchase used equipment or vehicles as well.
Business equipment finance is ideal for businesses who want to finance the purchase of, among others:
• cars, utility and commercial vehicles
• Forklifts
• Computing and business equipment
• Printing
• Medical imaging
• Laboratory equipment
• Industrial plant equipment
• Agriculture equipment
• Dry cleaning and laundry equipment
• Building maintenance equipment
• Landscape equipment
• Food service equipment
• Restaurant equipment
• Embroidery equipment
Choosing the right Finance Arrangement:
Lenders offer many types of business equipment financing. You have to choose the right one for your business. Here are some of the options available today:
Finance Lease – In a lot of ways it is similar to leasing a car. The company retains ownership of the equipment and you pay monthly payments until the end of the lease. The equipment is owned by the company and obviously cannot be counted among the business assets.
Commercial Hire Purchase – In this kind of financial arrangement the lender/credit provider owns the equipment during the hiring period (typically 2-5 years). At the end of the agreement period, the equipment ownership is transferred to you.
Chattel Mortgage – Under this loan arrangement you borrow the funds to purchase the equipment or vehicles, and you become the owner at the time of the purchase. The equipment is being used as collateral for the loan.
Rental – In this kind of arrangement, the lender is the one who buys the equipment and he rents it out to you. You have no ownership benefits.

The most important thing for your business is to have the right financial structure. If you choose a package that is not suited for your business, the result might hurt the business more than help it. Before deciding on the product, you should consult with your accountant and a financial expert to help you choose correctly.
Consider these questions:
1. Will the financing company assume the costs of the equipment insurance, taxes and maintenance?
2. Will the company handle installation, maintenance or asset management?
3. Can you upgrade or add equipment to the package?
4. What are your options to end this agreement? Is there a pre-payment penalty?
5. What are the procedures at the end of the lease for returning the equipment?
6. Are there extra costs at the end of the agreement period?
Understanding the number of payments you will owe, the total monthly amount due, and any additional costs, surcharges and even what is the late payment policy of the company you lease/loan from, are the initial steps to calculate the eventual costs of the equipment you want to have.

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