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Smart Financing Solutions for Your Business Vehicles & Equipment

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It’s no secret that running a business takes a large financial toll on entrepreneurs.

Most small to medium-sized businesses don’t have enough internal cash flow and capital to operate at a satisfactory level. For instance, these enterprises could lack computers for their staff to use, machinery to produce their product, or motorcycles for their delivery fleet.

In either case, it pays to be resourceful and look for external ways to acquire these assets. Fortunately, there are many financing solutions that your business can avail to acquire these key assets.

Ready to learn more about it? Here are several financing solutions your business can consider to readily acquire vehicles, pieces of equipment, and more vital assets.

Let’s begin!

1. Chattel Mortgage

Chattel mortgages, or equipment loans, are types of loans that grant you (the borrower) the ownership of the specific type of business equipment as soon as the contract is set.

This loan can only be requested if you’re taking out money for the purpose of purchasing equipment. This can range from a copy machine, a motorcycle, a computer— anything that’s mobile and meant to be used in the business.

Just like other loans, you’ll need to pay the principal and interest rate marked in the contract in a timely fashion to avoid late fees and penalties. The lender can also reclaim the equipment if you fail to meet repayment terms.

Since the equipment or vehicle is immediately under your business’s ownership, mortgage interest rates are generally higher than standard loan rates—starting at 7.5% per annum and reaching up to 15% per annum.

If you have a good credit score or can show that you make timely payments, you can get better rates—which can save you a good couple of bucks over the period of the loan.

2. Novated Leasing

Suppose you’re a full-time employee of a company and an entrepreneur on the side. In that case, you can enter a tripartite agreement with your employer and the leasing company to lease a vehicle as part of your salary package.

This agreement essentially helps reduce your pre-tax salary, which can put you in a lower tax bracket and thus reduce your taxable income. You can also earn tax benefits by availing deductions of associated vehicular costs, like fuel and maintenance.

Novated leasing is good since it grants you the car straight off the gate, albeit not under your ownership just yet. That said, you’re still expected to decide the vehicle’s fate at the end of the lease’s term—whether to buy the vehicle at market value, extend the lease, or initiate a new lease.

This can be a good thing since it grants your current self flexibility in how you can control your ownership status and the tax benefits associated with your move.

Remember, you don’t own the car right away, and this can be a good thing for your taxes, particularly if you’re still currently low on capital.

Are you still questioning the benefits of novated leasing?

Follow this link for more information to help you break down this viable option for financial planning.

3. Equipment Leasing

Don’t want to own your equipment yet, or are unable to find someone to grant you ownership? The plain and simple task of equipment leasing is another viable solution you can consider.

Equipment leasing offers a flexible alternative for businesses that aren’t able to purchase outright. By leasing, your business gains access to the latest equipment without the hefty initial investment (or super-high interest rates), preserving capital for other operational needs.

If you want to keep your debt cash outflow low for budgeting purposes, going this route is effective.

Once your cash starts ramping up considerably, you can then consider going into a contract to purchase the equipment when you’re ready—if the lender accepts this proposition, of course.

What’s more, leasing can provide tax benefits since the payments are tax deductible. If your finances are tight but you still need business equipment, you can take advantage of this method to utilise the tool without outright owning one.

4. Crowdfunding

Another way to secure financing for vehicles, equipment, and other key assets for your business is by looking into crowdfunding.

Crowdfunding is essentially a form of financing wherein businesses raise money through individual donors (also called backers) through online platforms. The amount donated can be big or small—it’s solely dependent on the individual’s contributions.

Typically, this way of financing is effective if the public holds an interest in your product or service offering. Businesses can even incentivise buyers who have contributed a minimum amount with unique offerings.

Of course, going this route requires businesses to be validated by the market; that is, your product needs to be good.

Marketing efforts are a must for crowdfunding to be effective, and once public sentiment of your offering is good, you can reap the benefits of many contributors helping you achieve you acquire your product.

5. Business Lines of Credit

If you (as the entrepreneur) have a good line of credit, you can apply for a business line of credit to potentially fund your asset acquisitions.

This type of financing works similarly to a credit card in that it gives you a predetermined amount you can borrow to spend on for a monthly period. Of course, you’ll have to repay it by the end of the due date for you to continue using this financial method.

This financing route grants entrepreneurs an extra means of financing their business, whether it be by buying assets or ensuring operational continuity. You also only have to apply for it once unlike loans, making it a smooth and flexible way of adding more to your cash flow.

6. Grants

Government grants are great ways of securing financing—and depending on your state and country, you can be eligible for multiple ones.

For example, in Australia, there are over 615 grant programs offered by various government sectors that you can avail of, depending on your eligibility, of course. You can typically search what type of program is fit for your specific needs through this grants finder database.

Just like other forms of financing, grants are great since they give you a set amount of finances for you to conduct business operations.

The application process can be cut-throat, but if you’re accepted into one, then you don’t have to worry about making repayments as the government will help you out in that respect.

7. Business Loans

One of the most accessible ways of getting funding for your business is by applying for a business loan. There are multiple credit agencies that can lend you cash, offering a wide range of fixed or variable interest rates and repayment terms depending on your creditworthiness.

You can consider vetting and calling these credit providers and asking around for good rates. Be sure that you can actually follow through with the terms set in the agreement.

Once you’ve spotted a potential fit, then go ahead and secure the loan.

You’ll have to fill up some paperwork and documentation before and after the approval of the loan, but once you’re done, you’re set and can use the money for any business activity of your choice—from buying new equipment to repairing old ones.

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