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An asset could be anything that depreciates over a period of time. It could be a vehicle, equipment, fit-outs or plant & machinery in the business.
An asset finance is a financing option that helps business owners to secure the essential tools and machinery needed for their business without paying a huge amount of money upfront.
It’s important to have the asset you need at the right time to maintain your business growth. Whether you have to buy a new or used vehicle or equipment, financing that asset may be the best-suited option for your small business as costly assets may be out of budget to purchase outright.
Asset loans are backed by the underlying assets to be purchased so no additional security is required in most of the cases.
What makes me eligible for an asset business loan?
| Borrowing Limits | |
|---|---|
| Loan Amount | $10k- $1M |
| Term | 2-5 years |
| Can be used for | Business purpose |
| Repayments | Monthly |
| Security | Secured against underlying asset financed. May not require real estate security in most of the cases. No real estate security required |
| Pre-Approval Time | 24 hours – 72 hours |
| Unconditional Approval and Settlement Time | 3-5 days |
| Low Doc Approval and Documents required |
|
| Full Doc Approval |
|
| Interest Rates | Starts from 6.25% p.a. |
| Benefits |
|
*The information provided in critical information sheet is intended as a guide only. Please contact us for more information.
In most cases, vehicle and equipment loans up to $150k get low doc approval just basis the following documents.
For a vehicle or equipment finance of more than $150k, you may require submitting the following additional documents
There are multiple ways to get an asset financed. Some of the popular methods of financing assets are listed below
| Chattel Mortgage | Commercial Hire Purchase (CHP) | Finance/Operating Lease |
|---|---|---|
| Your business can claim the full ownership of the asset. To qualify for business to finance, 51% of its use must be for business purpose. | By “hiring” a machine, you don’t own the asset, but you are entitled to use it while paying it off. When the last payment is made, the asset becomes officially yours. | Paying a regular “rental” fee to use the vehicle/equipment you need. Suitable for owners that want to use the assets for a shorter period. |
Benefits:
| Benefits:
| Benefits:
|
Disadvantage
| Disadvantage
| Disadvantage
|
Benefits:
Disadvantage:
By “hiring” a machine, you don’t own the asset, but you are entitled to use it while paying it off. When the last payment is made, the asset becomes officially yours.
Benefits:
Disadvantage
Paying a regular “rental” fee to use the vehicle/equipment you need. Suitable for owners that want to use the assets for a shorter period.
Benefits:
Disadvantage
Businesses operating in different industry could have different asset requirements and most of them can be financed through any of the above-mentioned options. Some of the most popular asset finance options are listed below
Range:
Keep track of planting and harvesting with agriculture equipment finance.
Range:
Keep up with demand and delivery your products on time to keep your customer happy with commercial vehicle financing.
Range:
Secure the truck needed for your business logistics with heavy vehicle financing.
Range:
Get the forklift needed to speed up the organising process.
Range:
Covers expenditure on new setup, renovation, relocation or reorganisation of business structures.
Range:
Get the right equipment for the right construction task with construction equipment financing
Apply for a business car loan if the intended use for business purpose is more than 51%
Get the right equipment for the right job to ensure the safety of your employees.
Provide a high-end dining experience for your guests with restaurant equipment financing.
Whether you need a vehicle or a piece of equipment to expand your business or to improve the productivity of the operation, you often come to this question: should I buy or lease?
As each of them has a different impact on your working capital, there are some factors you should consider before making a decision:
The lease term of an asset can range from 24 months to 60 months depending on the provider. If you’re planning to the asset for a longer-term, it might be cost-effective to buy the asset.
Signing a lease contract longer than the life expectancy of the asset is unwise. For instance, signing 5 years lease contract on a computer that typically becomes outdated after 3 years doesn’t feel right.
If your business is seasonal, you might find that you only need the extra assets during a certain time of the year. It might be better to lease the assets in this case.
You might prefer to lease the assets if you think they need frequent upgrades or maintenance, as those costs will be covered by the lease provider.
If the ownership of the assets belongs to your business, you can claim depreciation, tax, and other benefits. With leasing, there are no tax benefits that come with it.
Generally, lenders give different weightage to different kind of asset to be financed considering the risk attached to each category of assets.
(Small trucks, buses, yellow goods, trailers & caravans)
(vehicles <10 years old)
(Machinery, construction equipment)
(Office equipment and fit outs)
Low Risk
High Risk
We understand that you might be needing a vehicle or equipment urgently to fulfil your business However, there are few vital things which you should avoid while applying for vehicle and equipment financing.
You will be able to claim the interest payment of financing the loan as well as the depreciation on the assets because you are immediately the owner of the asset at the beginning of the finance.
Since you will only become the owner of the asset after making the final payment, you won’t be able to claim depreciation. However, you can still claim the interest cost that comes with financing the asset.
Operating and Finance Lease payments are fully tax-deductible. However, you won’t be able to claim the depreciation cost of the asset as you are not the owner of it.
As every finance structure has different ways of claiming tax deductions, we recommend that you seek independent tax advice to find the best-suited finance structure for your business.
Generally, most of the lenders would provide finance terms between 1-5 years. In exceptional cases, the loan term can be extended to 7 years.
You can be eligible for finance up to 100% on your vehicle or equipment depending on your overall business risk profile.
Yes absolutely, we can help you get finance for both new and used vehicles & equipment.
Generally, all primary and secondary assets that can be depreciated for business purposes can be financed. However different lenders have different lending policies regarding what types of assets they are willing to finance.
Yes, you can pay out your loan earlier. However, lenders may charge an early pay out fee depending on their policies.
Small businesses may struggle with irregular cash flows sometimes. We understand that you might have regretted spending a huge amount of money on paying the upfront cost for the vehicles or pieces of equipment your business need. However, we have good news for you! It’s not too late if you have already bought the vehicle, you can still finance it through loans. Some lenders may introduce loans that can reimburse the cost of the asset you bought. However, additional fees might apply.
Lenders take a charge of the assets financed through them and generally, you need to pay out the loan before disposing of it. You may enter into an arrangement with the buyer to refinance the loan with the buyer’s financier and get the differential equity cashed out.
Each lender sets their interest rates which are governed by their cost of funds. Your interest rate may also depend on your business risk profile, nature of the asset, trading time, credit history, financial strength, etc.
You may not always be eligible for an asset finance depending on the class and nature of the assets. In such a scenario, you can purchase an asset by taking a normal business loan which can be obtained against the cash flow of your business. Some of the popular cashflow business loan options are secured business loan, small business loan, unsecured business loans, business line of credit and invoice/debtors finance facilities. Please reach out to us on 1300 253 041 or send us a message. One of our lending specialists would get in touch in no time to assist you.
At Broc Finance, we endeavour to get the most adequate facility suitable to the business requirements of our clients. In most of the cases logged in through us, we try to get an indicative offer from the lender for our client’s consideration before proceeding with formal application and consent to credit check. This approach helps our clients to avoid unwanted rejections and credit checks which can significantly impact their credit scores.
We would be happy to answer if you have any other questions. Please contact us.
Contact us today and discover how our expertise can help your small business thrive.
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1300 253 041
EMAIL US
enquiries@brocfinance.com.au
Broc Financial Services Pvt Ltd.
ACN 648 088 304
Credit Representative number 540795 is Authorised under Australian Credit Licence Number 389328