$150K IAWO – To Buy or Not to Buy
June 2, 2020
Equipment Finance
Financing commercial assets is a very effective way of accessing the equipment that most businesses need to grow in a highly competitive market, whilst preserving the all important cash flow and taking advantage of significant potential tax benefits.
We have helped hundreds of businesses to get hold of the equipment they need.
Anyone can sell a finance package, but what we do best is understand your business needs, communicate well, and make the process of obtaining finance as simple as possible. Don’t take our word for it – read what our customers have to say.
Let’s face it, banks can offer great products and attractive rates, but ‘simple’ generally isn’t in their vocabulary. At Ecolease, we understand that as a small business owner you are far too busy – and that’s why we offer one thing we believe the banks don’t – simplicity.
Ecolease is all about making finance simple by offering great service, the right financial products, from a select range of funders, which means your business maintains a healthy degree of commercial flexibility. Plus, by obtaining finance through a broker such as Ecolease, you minimise the risk of over exposure to any one banking institution.
Find out more about our range of equipment finance products to see what finance is right for your business.
Watch the “Steps to Equipment Finance” video to learn more about the equipment finance process.
Talk to us today
We are experts at making equipment finance simple and would love to understand your business and help you get hold of the equipment you need.
Equipment Finance Products
We offer a range of finance options to suit your requirements – ask us which one is best for you.
Rental-to-Own
Lease the equipment you need with no upfront deposit and flexible terms to match your cash flow requirements. The lender owns the equipment during the lease agreement.
Features:
- Most depreciable assets can be financed
- Terms range from one to five years
- Interest rate and repayments fixed for contract term
- Irregular or seasonal payment schedules available
Benefits:
- Preserve your working capital with 100% financing
- Rental payments may be tax deductible if you use the asset to generate income
- May be able to claim input tax credit for rental and other charges that are subject to GST benefits
So when considering a leasing option, think:
- equipment that has a long income generating life cycle
- no upfront payment as the equipment is typically secured against itself
- lease payment fully tax deductible
- GST component of lease can be claimed in arrears
Compare Finance Products | Download Our Equipment Finance Brochure (PDF)
NOTE: As the taxation and accounting treatments of various finance products may vary, we recommend you seek independent expert advice before choosing an option.
Specific Security Agreement
A Specific Security Agreement (formally known as a Chattel Mortgage) is a loan agreement where you borrow funds to acquire an asset. You provide security for the loan by way of a mortgage to the bank over the asset financed.
Features:
- Can be used to finance most equipment that generates income
- Terms range from one to five years
- Loan can be structured with or without balloons and with payments in advance or arrears
- Interest rate and repayments fixed for loan term
Benefits:
- No deposit generally required
- Repayments may be tailored to suit your cash flow
- No GST on the loan or repayments
- You retain ownership throughout the loan term
- Interest component of repayments and depreciation on the equipment may be tax deductible if the equipment is used to generate assessable income
So when considering Specific Security Agreement, think:
- small to medium sized businesses who manage their business account using the Cash Method
- registered ownership of equipment at commencement of facility
- the interest paid and depreciation value are fully tax deductible within each BAS cycle
- pre-determined final balloon payment
Compare Finance Products | Download Our Equipment Finance Brochure (PDF)
NOTE: As the taxation and accounting treatments of various finance products may vary, we recommend you seek independent expert advice before choosing an option.
Finance Lease
Finance income-producing equipment and vehicles while keeping working capital for other expenses.
Features:
- Can be used to finance most equipment that generates income
- Terms range from one to five years
- You can return the asset at the end of the term or refinance if you prefer to keep it.
- Must contain a residual amount set by ATO guidelines
- Leasing terms, including residual, consider the value of the asset at the end of the lease to reflect the equipments expected useful life
Benefits:
- 100% finance, so no upfront deposit required
- Allows you to purchase income generating equipment without impeding on your cash flow
- Residual component helps keep repayments to a minimum
- If equipment is used solely for the business a tax deduction for the full repayment may be available
- Interest component of repayments and depreciation on the equipment may be tax deductible if the equipment is used to generate assessable income
So when considering Leasing, think:
- cash flow advantages
- depreciation value and possible tax deductions
- manageable repayments
Compare Finance Products | Download Our Equipment Finance Brochure (PDF)
NOTE: As the taxation and accounting treatments of various finance products may vary, we recommend you seek independent expert advice before choosing an option.
Commercial Hire Purchase
Get the equipment you need by hiring over a fixed term with payments tailored to your business needs. You own the equipment when the final payment is made at the end of the term.
Features:
- A commercial hire purchase (CHP) agreement is an agreement to purchase vehicles, plant or equipment subject to payment terms
- Terms range from one to five years
- During the term of the agreement, the lender owns the vehicle, plant or equipment
- Ownership is automatically transferred to you when you make final payment
- You have the option to purchase the equipment at any time during the term of the agreement
- Repayments can be tailored to your cash flow
Benefits:
- No deposit generally required
- Purchase the equipment outright at any time during the agreement term
- Interest component of repayments and depreciation on the equipment may be tax deductable if the equipment is used to generate assessable income
When considering Commercial Hire Purchase (CHP), think:
- ownership at the end of the facility
- no upfront deposit required as security is usually the asset itself
- input tax credits for GST can be claimed in the price of the asset at the commencement of facility
- the interest paid and depreciation value are tax deductible
Compare Finance Products | Download Our Equipment Finance Brochure (PDF)
NOTE: As the taxation and accounting treatments of various finance products may vary, we recommend you seek independent expert advice before choosing an option.
Rental Operating Lease
An efficient and cost-effective strategy if you are continually upgrading your equipment or if you want to rent rather than own your asset. It is an agreement between you and the lender to rent equipment for use for a fixed period. At the end of the rental term, you have the option to return the equipment to the bank (subject to return conditions), upgrade the equipment or purchase the equipment.
Features:
- Most depreciable assets can be financed
- Terms range from one to five years
- Repayments fixed for contract term
- Option to return, upgrade or purchase the equipment at the end of the contract term
Benefits:
- Provides 100 per cent of funds, allowing you to preserve your working capital
- Provides access to the latest equipment and technology without associated ownership risks
- Offers the flexibility to respond to changing market demands
- Rental payments may be off balance sheet, providing scope to improve business performance ratios (e.g., return on assets)
- Rental payments may be tax deductible if you use the asset to generate income
- May be able to claim input tax credit for rental and other charges that are subject to GST
So when considering a rental agreement, think:
- equipment that is regularly superseded
- equipment that depreciates quickly
- equipment that needs to be regularly upgraded
- competitive advantage relies on latest technology
- 100% tax deductible
Compare Finance Products | Download Our Equipment Finance Brochure (PDF)
NOTE: As the taxation and accounting treatments of various finance products may vary, we recommend you seek independent expert advice before choosing an option.
Compare Our Equipment Finance Products
| Ownership | Deposit | Residual | End of Term Options | Tax Treatment | |
|---|---|---|---|---|---|
| Rent-to-Own | Financier – with customer purchasing the equipment at end of term for one additional month’s payment | No | No | Own the equipment for one additional month’s repayment | Monthly payments are 100% tax deductible when goods are used for business |
| Specific Security Agreement (SSA) | You own the equipment throughout the term with the lender taking a mortgage over the goods | Optional | Optional | None – unless there is an optional balloon payment in which you can refinance that amount or pay it in full | Interest & depreciation are tax deductible per ATO guidelines |
| Commercial Hire Purchase (CHP) | Financier – with customer taking over title upon finalisation of contract | Optional | Optional | None – unless there is an optional balloon payment in which you can refinance that amount or pay it in full | Interest, GST & depreciation are tax deductible per ATO guidelines |
| Finance Lease | Financier – with customer taking over title upon payment of pre-determined residual at end of term | No | Pre-determined residual (set by ATO guidelines) is owed at end of term | Refinance the residual or pay it in full to keep the goods | Monthly payments are 100% tax deductible when goods are used for business |
