The Benefits of Getting Asset and Equipment Finance for NZ Businesses
Businesses start small but they will need additional resources if they are to grow. A start-up will often be financed by spare cash from the business owner but growing after the initial starting phase can be a challenge. Cash is usually tight in most businesses so the idea of buying new plant or machinery from the cash reserves is often not an option. The best answer is to look at a funding concept called asset or equipment finance in NZ.
Asset backed finance is a very common method of financing your business growth. It offers access to financial aid without placing any major restrictions on the business or the owner of that firm. Instead the finance company will take a charge over the asset itself. The main benefit of this is that if the company does not meet its repayments, rather than the business or the owner’s home being at threat, the financier will simply take back the asset.
Of course this will have some knock-on effects to the business but it is by n means as catastrophic as forcing the business into liquidation or losing your home.
Requirements for equipment finance
Just as with any other financial mechanism, the business owner will have to prepare and submit various reports and forms. These will vary from one lender to another but in most cases you will find that they will want to see the following documents:
- Personal financial statements
- Tax returns
- Management profile
- Detailed business plan
- Plan of the intend use of the funding
It is important to remember that it does not matter how serious or convinced you area about the potential of your project, the lender is the one that needs to be sure. They will have many requests for their limited pool of money that they can lend. So the business plan with the best case will be the one that gets the approval to go ahead.
Therefore, you must complete and provide the information that the funding institution asks for in the manner that they want to see it. If you deviate from their request you are making your chances of asset financing a bit more difficult. The rule is simple; play their game according to their rules.
Typical uses of equipment finance in NZ
Businesses have all sorts of different needs for financing. The projects will depend upon the size of the company, its stage of development, the competition and the level of activity in that market.
Some common requests for asset finance include:-
- Production equipment
- Trucks and vehicles
- Business equipment like new computers
- Farming equipment
- Construction machinery
- Packaging machines
- And many more
Points to note about equipment finance
Asset finance has many advantages over other forms of financing. We mentioned above that the lender does not take any security over the company or the business owner’s house. Instead the asset itself is the security that they lender will take.
There may be some tax advantages by taking a form of asset finance compared to other loans. Be sure to talk to your accountants to have them look at the tax implications. They can advise you on how this will impact your bottom line and your balance sheet. Talk to them before you progress too far down the track of getting business finance.
Often the borrower can set some relatively favourable terms for repayment. This can be in terms of the repayment period or the monthly repayment costs. However, do bear in mind that the longer the loan period or the lower the repayments, the more you will pay in the end.
Asset finance loans can be processed and approved in a reasonably quick time frame, mostly within 24hours.
The prospects of getting some asset financing may not be affected by previous bad credit. This is because the lender is taking the asset as security and as long as you make the payments, they are happy. However, the equipment finance company may apply higher interest rates.
There are numerous companies which provide different forms of asset finance in NI. Some are attached to the big mains while others like Marac offer their own products. To give you more flexibility and a better range of options for asset equipment finance in NZ, look instead at independent commercial finance companies like Global Pacific. They work with various funding sources and provide finance in a lot of diverse industries. They are a good first option.
Their website is www.globalpacific.co.nz/.