If you want new plant and machinery for your business, you should consider your options carefully. Plant machinery finance is a kind of credit that enables cost-sharing so you can obtain the necessary equipment without having to pay for it all at once. It makes your payments affordable without having to use cash reserves. Financing for plant machinery can also be tax-efficient because you can offset your rental or interest payments to lower your tax liability.
Who Needs Plant Machinery Finance?
Plant machinery finance is appropriate for enterprises that want plant and machinery but do not wish to pay for it entirely, such as small parts makers and large engineering firms. Plant machinery finance helps to keep down costs and improve cash flow.
What Types Of Plant Machinery Can Be Financed?
Plant and equipment finance can be used to purchase vehicles and equipment such as bulldozers, cranes, drilling equipment, piling equipment, compactors, mini diggers, excavators, concrete mixers, demolition equipment, pavers, loading shovels, vans and lorries.
Available Finance Options for Plant Machinery:
This allows you to rent equipment over a fixed term. Although you pay to utilize the item, the leasing company is in charge of its upkeep. You have several options for what to do with the asset at the conclusion of the lease: you can buy it with a balloon payment, return it, or prolong the lease. Equipment leasing offers tax advantages. It is popular with startup companies with limited capital to invest in assets, or established businesses that want to upgrade their equipment. It can be more expensive than buying outright.
In this case, the asset is purchased by a leasing business, which then rents it back to you. You repayments the equipment on a regular basis until the total cost, including interest, is paid. During this time, you are in charge of paying for both the insurance on the plant machinery and maintenance. You have three options: you can sell the asset on behalf of the leasing firm, return the equipment, or prolong the rental period after it has ended.
This is an agreement to rent equipment for a limited time, during which you make regular, fixed payments. It can be a good option if you want to upgrade your equipment regularly. It is usually also cheaper than a finance lease.
With this, you pay an initial deposit followed by monthly instalments, with interest charged on top. It is simpler than equipment leasing, but less flexible as at the end of the term, you own the equipment with no other options. The company that hires you the equipment is normally responsible for maintenance.
Asset refinancing comes in a pair of forms. To begin with, you can pledge your possessions as collateral for a loan. These assets may be sold if you are unable to pay back your debt. The loan is less expensive than other options because the lender has this security. You can otherwise choose asset-based lending, where you sell the asset to a finance company for an agreed price. You then lease that asset back and repay the lump sum. At the end of the agreement, you will usually own the asset.