Many businesses will at one point want to increase their capital. In most cases, the businesses will opt to obtain funds from external sources so as to finance the purchase of machinery and equipment. The main reason as to why businesses prefer using external sources of funding is because they do not want to use their own money to finance the machinery and equipment. When a company chooses to finance the purchase of machinery using money from operations, it will reduce their cash flow and subsequently reduce the profitability of that particular business. It should be noted that most of the machinery required for operations are very expensive and take a long time to provide returns on the capital spent. The various sources of finances are discussed below.
Companies can obtain a bank loan to finance machinery or equipment needed for operations. The company will be required to provide information related to its financial stability as well as its current and projected cash flows. The whole process can take several weeks or months depending on the banks application process. If a company does not have sufficient assets to act as collateral for the loan, the business owners will have to pledge some of their own personal assets to act as collateral.
Leasing is another option for machinery and equipment financing. A company can lease machinery and equipment from a supplier or from a bank. In most cases, lease payments are higher than loan payments. This can be attributed to the fact that the loan is for a fixed term and the company does not own the leased machine. At the end of the lease period, the company has the option to buy the machine.
These are two of the main options when it comes to machinery and equipment finance. If you are in need of machinery finance, give us a call and we will take you through the options available to you as well as assist you in choosing the option that best suits your needs.
We look forward to servicing your financial future
Call 1300 77 21 21 today because you have a lot to gain and nothing to lose!