How Commercial Asset Finance Can Help Your Business Stay Competitive
Need new assets to expand your business but don’t want to incur major upfront costs? Commercial asset finance could be the best solution for your business. As a business owner, you’ve likely faced the challenge of wanting to expand your business–whether that means hiring more employees, moving offices, diversifying your product/service offerings, or most importantly, accessing the latest technology. However, finding the funds to do so can be challenging.
Rather than taking out a traditional loan to finance new equipment outright, commercial asset finance can be a more economical, flexible alternative. This article will explore how commercial asset finance can help your business remain competitive.Â
Commercial Asset Finance – ExplainedÂ
In essence, commercial asset finance is designed to help businesses obtain pricey assets: computers, printers, office equipment, vehicles, and more, without having to pay for the full cost of it upfront. Instead, the costs are spread across equal loan payments over a fixed period of time. This enables businesses to keep costs at a minimum, allowing them to invest in other, more pressing growth opportunities.
There are three main types of commercial asset finance:Â
- Leases are the most common type of asset financing utilised by businesses. It allows businesses to use an asset for a fixed period of time with payments made regularly. At the end of the lease agreement, the business may have the option to purchase the asset at its current value.
- A hire purchase is similar to a lease but it comes with the intention of owning the asset at the end of the payment term.
- A chattel mortgage is when the business is keen on owning the equipment from the get-go. The borrower takes ownership of the asset from the very beginning, but uses it as collateral for a loan.Â
Benefits of Commercial Asset FinanceÂ
Curious about how asset financing can help your business grow? Benefits include:Â
Capital Preservation
Without significantly depleting your working capital, you’ll be able to acquire the necessary tools needed for growth. By strategically spreading payments over time, asset financing helps businesses maintain a healthy cash flow which is crucial for immediate investments. In the long run, this helps maintain a sustainable business model.Â
Tax BenefitsÂ
According to Commonwealth Bank Australia, an instant asset write-off deduction may be available– if certain eligibility requirements are met. For example, for chattel mortgages and hire purchases, deductions may be available for costs associated with depreciation, interest rates, and operating expenses. Likewise, businesses may also be able to claim GST input tax credits upfront.
Moreover, in terms of leases– loan payments may be tax-deductible. Some businesses may even be entitled to claim GST input ax credits in their Business Activity Statement.
For more information on this, it’s important to enlist the help of a taxation expert or an insurance broker. An experienced broker can help with providing all the necessary policy documentation and payment breakdowns so your tax advisor can claim deductions accordingly.
Improved Flexibility
There are a range of commercial asset financing options available for businesses to choose from. Each option is designed to cater to the distinct needs of a business. This allows them to choose the option that best suits their immediate and future needs based on their financial goals, operational efficiency, and ideal growth trajectory.
Need help determining the right type of commercial asset financing for your business? An insurance broker can help tailor financial solutions to meet the specific needs of each business through partnerships with a range of providers, securing better rates and terms.
More Risk Averse Â
Businesses are able to assess and mitigate any potential losses associated with the acquiring and ownership of assets. This is because business success isn’t always guaranteed.
So, if there’s ever the likelihood of defaulting on the asset finance agreement, the business will only lose asset ownership and not necessarily be liable to any other major risks. While unfortunate, it’s a preferred option.
Access to Latest TechnologyÂ
To always be one step ahead of the curve, businesses need access to the latest technology. Commercial asset based financing enables businesses to gain access to the best equipment available in the market without needing to worry about budget limitations.Â
Morgan Insurance Brokers – Your Commercial Asset Financing PartnersÂ
If you’re considering commercial asset financing to grow your business, do not hesitate to contact Morgan Insurance Brokers for access to the best asset financing options. With our industry connections, our team of experts will help you secure a better rate and term.
Contact us today!Â
