Manufacturing businesses across Sunbury require reliable machinery to maintain productivity and stay competitive. When buying new equipment or upgrading existing equipment, understanding your finance options can make the difference between a sound investment and a financial burden.
Understanding Commercial Equipment Finance Options
Commercial equipment finance provides businesses with the capital needed to acquire essential assets without depleting working capital. Whether you need factory machinery, specialised machinery, or office equipment, the right loan options can support your business needs while preserving cash flow.
Manufacturing businesses typically require:
• Heavy machinery such as excavators, cranes, and dozers
• Factory machinery for production lines
• Work vehicles including trucks and trailers
• Specialised equipment like tractors and graders
• Supporting office equipment and technology
Types of Equipment Finance Available
Chattel Mortgage
A chattel mortgage allows your business to own the equipment immediately while using it as collateral for the loan. This structure offers tax advantages, as you can claim depreciation and interest deductions. Fixed monthly repayments help manage cashflow effectively throughout the loan term.
Hire Purchase
With hire purchase agreements, you make regular payments throughout the life of the lease before taking ownership at the end. This option requires lower upfront costs and provides predictable monthly expenses.
Operating Lease
Operating leases suit businesses that prefer to upgrade equipment regularly. You use the asset for an agreed period without owning it, which can provide tax benefits and flexibility.
Key Factors Affecting Your Equipment Finance
Interest Rate Considerations
The interest rate on your equipment finance depends on several factors including your business credit history, the loan amount, and the type of equipment being financed. Manufacturing machinery typically attracts favourable rates due to its tangible value and business-critical nature.
Loan Amount and Terms
Lenders assess your ability to service the debt based on cash flow, business performance, and the equipment's value. The loan amount can often reach up to 100% of the equipment's purchase price, depending on your financial position.
The Equipment Finance Application Process
When applying for equipment finance, prepare the following documentation:
- Financial statements for the past two years
- Tax returns and activity statements
- Equipment quotes and specifications
- Business plan outlining how the equipment will generate income
- Bank statements showing cash flow patterns
A streamlined application process typically takes between 24 to 48 hours for preliminary approval, with final approval dependent on equipment valuation and documentation verification.
Common Mistakes to Avoid
Insufficient Research on Finance Options
Many businesses accept the first finance offer without exploring alternatives. Different lenders offer varying terms, and having access to equipment finance options from banks and lenders across Australia ensures you secure appropriate terms.
Overlooking Total Cost of Ownership
Focus on the total cost including interest, fees, and maintenance rather than just monthly repayments. A lower interest rate with higher fees might cost more overall.
Inadequate Insurance Coverage
Lenders require comprehensive insurance on financed equipment. Factor insurance costs into your budget from the outset.
Benefits for Sunbury Manufacturing Businesses
Equipment finance offers several advantages for local manufacturers:
• Preserves working capital for operational expenses
• Provides tax benefits through depreciation and interest deductions
• Enables immediate productivity improvements
• Spreads costs over the equipment's useful life
• Allows businesses to acquire newer, more efficient machinery
Choosing the Right Finance Partner
Working with experienced finance brokers provides access to multiple lenders and loan options tailored to manufacturing businesses. Professional brokers understand the unique requirements of different industries and can structure finance solutions that align with your business needs.
At Step Ahead Finance, we help Sunbury businesses access equipment finance options that support growth while maintaining healthy cash flow. Our team understands the manufacturing sector's requirements and works with lenders who specialise in commercial equipment finance.
Whether you need to finance a single piece of specialised machinery or outfit an entire production facility, the right finance structure can make your investment more manageable and tax-effective.
Don't let inadequate financing hold back your business growth. Call one of our team or book an appointment at a time that works for you to discuss your equipment finance requirements.
