Most businesses need vehicles or equipment – there's no getting around it. For your company that might mean a Point of Sale (POS) system or piece of hardware, it could be equipment like office chairs and desks. Or, you might have tools, vehicles or machinery that need to be upgraded.

What type of small business financing do you need?

In a nutshell, vehicle and equipment financing enables you to purchase vehicles, machinery, office equipment or other requirements on a lease or rental basis. There are several options available for small business funding, including the following.

Vehicle and equipment loan

These are business loans you take out to buy a piece of equipment. You own the asset, and the bank uses it as security (in case you default on repayments). This is the option chosen by most businesses, and makes up 77% of the market.

Equipment lease financing or finance lease

In this scenario, the bank or lender would own the equipment and rent it to the business for an agreed term at a fixed rental rate. At the end of the term, you must return the goods to the lender. However, you can make an offer to purchase the goods or an offer to lease the goods for a further term.

Hire purchase

If you opt for this type of loan, the finance provider owns the equipment and you make repayments on it until the end of the term, when it then becomes your property.

Worried about making repayments?

It’s a concern for many business owners dealing with a cyclical cash flow, and banks are responding with flexible repayments for vehicle and equipment financing. Repayments can be matched to periods of higher cash flow – giving you peace of mind during quieter times in your business. You’re also able to borrow the full amount of the purchase price, which means you can reserve your cash flow for other areas of your business.

Important information

The information contained in this article is correct as of July 2018 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.

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