You know the plant and machinery that you need to keep your business moving forward. There is also a budget set in place in terms of what it will cost your business. However, it all boils down to choosing the right finance that will be tailor-made for your business. Here are five things to consider when it comes to financing your plant and machinery the right way.
1. Speak to a professional
Being spoilt for choice when it comes to the various finance options that are available on the market, things can get a bit confusing. The last thing that you want is choosing a finance option that could end up draining your finances in the long run. Speaking to a financial advisor, lender, or broker that specializes in providing finance for plant and machinery equipment can help you walk away with the best deal suited for your business.
2. Know what your options are
The other benefit of speaking to a finance broker is that they will be able to show you finance options that you may have known about that are effective for your business. Financing equipment such as; excavators, dozers, concrete mixers, tower cranes, and more is not something that most businesses can afford upfront because it is expensive to purchase right off the bat.
Other finance options that are available can be things such as; taking out a commercial loan, leasing the equipment, or rental agreements. Checking that your loan will allow you wiggle room to get equipment that is suitable for your business is vital.
3. Check the loan features
Once you have established that you will not be able to afford the equipment through cash, the next best thing is to take out a loan. Most businesses in Australia tend to attach a loan when it comes to purchasing equipment. According to the Australian Bureau of Statistics, there was a 1.9% increase in commercial loans which reach a total of $44,081 million in September.
Before you sign your name on the loan contract make sure that you have checked the loan features. This means looking beyond the interest rate. Check if the loan has a repayment structure that matches your business cash flow, especially if you operate on a seasonal basis.
4. Do you want to own the equipment outright?
You will be faced with the age-old question as to whether you will be better off leasing the equipment or purchasing it. Both have their benefits and drawbacks. The outcome will be based on how you are planning to run your business, and which one will be the most cost-effective for it.
For example, having outright ownership of the equipment can be beneficial if you use it frequently. Therefore, purchasing it can be ideal. However, if you run a business that needs equipment that needs to be functioning at its optimal level and needs to be updated, you may be better off leasing it. Remember to weigh the pros and cons before deciding.