Leaseback options mean that capital tied up in existing assets can be unlocked and used for whatever a business needs to grow. If you have made a recent asset purchase in the last few months and need some additional cash flow, this is a great option.
Secure, Fixed Costs
A defined payment plan can eliminate uncertainty allowing businesses to budget for fixed costs of an asset through the contract.
Opens Up Additional Lines Of Credit
By providing extra facilities alongside cash resources and existing bank credit lines, asset finance can offer a quick solution without affecting a business’s current financing arrangements.
Speeds Up Credit Decisions
A pain free application process such as that offered by Geared Asset Finance means that a business can get a prompt credit decision, this could take as little as 24 hours.
End Of Term Flexibility
When replacing or updating assets with the latest equipment and technology, businesses can afford to be flexible about the length of time they hang on to the assets.
Two of the more popular options are an Operating Lease (Rental) and a Chattel Mortgage, here are the key benefits of each solution.
Benefits of a Rental\Operating Lease
Rental allows you to treat the cost of acquiring a piece of equipment as an ongoing expense (eg. electricity, water, stationary, etc.) rather than paying for the entire cost upfront. Many assets can or need to be replaced within a period of 5 years so it makes sense to rent these and treat the entire rental payment as an expense to receive a 100% tax deduction. Renting rather than purchasing means you can completely write-off the equipment and receive a high level tax-benefit.
• Payments are 100% tax deductable.
• Classed as an operating expense that you run through your profit & loss statement.
• Does not appear on your balance sheet as debt or loan.
• GST is claimed on each payment.
• Finance 100% of the purchase price.
• Ability to bundle in the cost of installation and maintenance.
• Upgrade, add-on or replace the equipment during the term.
• Upgrade, return or purchase the equipment at the end of term.
Benefits of a Chattel Mortgage
Similar to that of a Home Mortgage, a Chattel Mortgage allows you to buy an asset which the finance company finances on your behalf. The financier has a mortgage over the asset until you have paid it off, at the end of the term the asset is yours and there is nothing more to pay.
• Traditional form of equipment loan.
• Equipment is owned by the client at the end of term.
• Interest charges and fees relating to the transaction are tax deductible.
• Payments are a capital expense and are reported on your balance sheet as a debt or loan.
• GST is claimed upfront on the entire purchase price.
• Depreciation can be claimed as a tax deduction to write down the asset cost over time.
If you would like to find out more please contact us on 1300 748782.