Running a business in Perth often means investing in the right equipment to stay productive and competitive. Whether you're looking at buying new equipment, upgrading existing equipment, or acquiring specialised machinery, the upfront costs can put significant pressure on your cashflow. That's where asset finance comes in.
At Freo Finance, we help Perth businesses access Asset Finance options from banks and lenders across Australia to fund everything from construction equipment to medical devices. Let's explore how machinery purchase financing works and why it might be the right solution for your business needs.
What is Asset Finance for Machinery?
Asset finance is a type of business equipment funding that allows you to acquire the machinery you need without paying the full amount upfront. Instead of draining your cash reserves, you can spread the cost over time through fixed monthly repayments.
The machinery itself serves as collateral for the loan, which often makes this type of finance more accessible than unsecured business loans. This approach helps you preserve working capital for other operational expenses while still getting access to the latest equipment.
Types of Equipment You Can Finance
The range of machinery and equipment you can finance is extensive. Here's what Perth businesses commonly fund through asset finance:
- Construction equipment finance: excavators, cranes, dozers, graders, and other heavy machinery
- Commercial vehicle finance: trucks, trailers, and work vehicles
- Medical equipment finance: diagnostic machines, treatment devices, and consultation room setups
- Hospitality equipment finance: commercial kitchens, refrigeration units, and food preparation equipment
- Technology equipment finance: computers, servers, and IT infrastructure
- Office equipment: furniture, phone systems, and printing equipment
- Agricultural machinery: tractors, harvesters, and irrigation systems
- Factory machinery: production lines, packaging equipment, and processing units
Common Finance Options for Machinery
When it comes to purchasing machinery, several finance options are available depending on your circumstances:
Chattel Mortgage
This is one of the most popular options for businesses. You own the equipment from day one, and the lender takes a mortgage over it as security. You claim depreciation and receive tax benefits throughout the loan term. The GST treatment is favourable too - if you're registered for GST, you can often claim the GST back on the purchase price upfront.
Hire Purchase
With Hire Purchase, you make regular payments over an agreed term, and ownership transfers to you once the final payment is made. This option suits businesses that want to own the equipment eventually but prefer to spread the cost.
Finance Lease
A finance lease allows you to use the equipment for the life of the lease without owning it outright. At the end of the term, you typically have options to upgrade, return, or purchase the equipment.
Operating Lease
This option is ideal if you need equipment for a specific period or want to maintain a regular upgrade cycle. You use the equipment during the lease term and return it at the end, making it easier to access the latest technology or machinery.
Understanding Key Terms
Balloon Payment
Some finance structures include a balloon payment - a larger lump sum due at the end of the loan term. This reduces your fixed monthly repayments during the loan period, helping you manage cashflow more effectively. The balloon amount is typically a percentage of the loan amount.
Interest Rate
The interest rate on commercial equipment finance varies based on factors like the loan amount, the type of equipment, your business's financial position, and the lender's assessment. Working with a finance broker gives you access to multiple lenders to find suitable terms.
GST Treatment
Understanding the GST implications of different finance structures can affect your cashflow significantly. Some arrangements allow you to claim the GST upfront, while others spread it over the payment term.
Tax Benefits and Depreciation
One of the significant advantages of financing machinery is the potential tax benefits. Depending on the finance structure and the equipment value, you may be eligible to claim depreciation deductions. Some businesses can access instant asset write-offs for eligible equipment, allowing them to deduct the full cost in the year of purchase.
Always consult with your accountant about the specific tax implications for your situation, as these can substantially reduce the real cost of acquiring new machinery.
Vendor Finance and Dealer Finance
Sometimes equipment suppliers offer vendor finance or dealer finance arrangements. While these can be convenient, it's worth comparing them against other finance options to ensure you're getting terms that suit your business. An independent broker can help you evaluate whether the supplier's offer represents good value or whether alternative lenders might offer more favourable conditions.
Fleet Finance and Multiple Assets
If you need to finance multiple work vehicles or pieces of equipment, fleet finance solutions can streamline the process. Instead of arranging separate loans for each asset, you can bundle them together, often with better terms and simplified administration.
Asset Based Lending vs Equipment Leasing
Asset based lending uses your equipment and other business assets as security for funding, which can provide access to larger loan amounts. Equipment leasing, on the other hand, focuses specifically on accessing machinery without ownership. The right choice depends on whether you want to own the asset, your tax position, and your long-term business growth plans.
Preserving Capital for Business Growth
One of the primary reasons Perth businesses choose machinery finance is to preserve capital. Rather than tying up hundreds of thousands of dollars in a single purchase, you maintain liquidity for other opportunities - hiring staff, marketing, purchasing inventory, or managing seasonal cashflow variations.
This financial flexibility can be crucial, especially when unexpected opportunities or challenges arise.
Working with Freo Finance
As specialist truck and equipment finance brokers, we understand the unique challenges Perth businesses face. We work with banks and lenders across Australia to find finance solutions that match your business needs, whether you're a sole trader buying your first vehicle or an established company investing in factory machinery.
Our team takes time to understand your situation, explain your options clearly, and handle the application process. We're here to help you make informed decisions about financing your business equipment.
Getting Started
Before applying for commercial equipment finance, gather information about:
- The specific machinery you want to purchase
- The supplier or dealer details
- Your business financial statements
- How the equipment will benefit your operations
- Your preferred repayment structure
Having this information ready helps streamline the application process and gets you closer to acquiring the machinery you need.
Financing machinery doesn't have to be complicated. Whether you need construction equipment finance for excavators and graders, medical equipment for your practice, or technology equipment to modernise your operations, the right finance structure can help you acquire what you need while maintaining healthy cashflow.
Call one of our team or book an appointment at a time that works for you. We'll discuss your requirements and explore the finance options available to help your Perth business access the machinery it needs to thrive.
