5 Reasons Why Finance Can Be Beneficial Over Your Own Capital

Are you thinking about financing your company’s equipment? If so, you may be wondering whether it’s better to use your own capital or take out a loan. There are a number of factors to consider when making this decision. However, in many cases, equipment financing can be more beneficial than using your own capital.

Here are 5 reasons why:

1. You can preserve your capital.

2. The low interest rate environment

3. Tax advantages

4. You can get flexible repayment terms.

5. Ease of getting your business started or growing.

If you’re still not sure whether equipment financing is right for your business, contact us today. We’ll be happy to help you explore your options and find the best solution for your needs.

Preserving your own capital and having a fluid cash-flow is one of the most important factors when running a business to ensure you have enough. Many expenses a business will face can not be financed directly for wages, bills, marketing, rents and so on. Using equipment finance to purchase assets means you can preserve your working capital to invest in other facilitates of your business to aid growth. Opportunity cost is a factor that business owners need to consider when investing their spare capital. Investing your money into asset that could have been financed means you can not invest your money in other areas such as marketing to increase sales. This is why using equipment finance can be more beneficial than your own capital as your capital can be spent elsewhere to generate more sales or improve the business in another way.

The low interest rate environment cannot be ignored when selecting the best option for financing equipment. Interest rates are at historic lows and are expected to stay low for the foreseeable future. So it doesn’t make much sense to invest your own money when you can get such low financing rates.
Moreover, there are usually special financing programs available with equipment financing. These can lower the interest rates even further, providing you with additional savings. You can also often get an extended payment plan and other benefits.
By taking out an equipment loan, you don’t have to worry about tying up your own capital. And you don’t have to worry about making higher payments due to rising interest rates.
The low interest rate environment makes equipment financing even more advantageous. So, if you’re considering this option, make sure to take advantage of the current rates.

Tax advantages are another benefit of equipment financing. In the UK, there are tax deductions and incentives available for businesses that finance their equipment. This reduces the cost of the equipment over time and helps businesses save money.
UK Tax relief allows businesses to deduct the entire cost of qualifying equipment in the first year of purchase. This allows businesses to take full advantage of these deductions and reduce their tax liabilities.
Therefore, it’s important to be aware of all the tax advantages that are available before taking out equipment finance. This allows businesses to better assess their financing options and make the right decisions.

Flexible repayment terms are another major benefit of equipment financing. The terms and conditions of equipment financing depend on the lender. Most lenders work with businesses and offer options that are tailored to their business needs.
Equipment financing is typically structured in a way that allows businesses to pay for the equipment over a period of time that is between 6-72 months. The installment payments are typically substantially lower than the total cost of the equipment. These payments can be made according to flexible terms that are determined by the borrowers and lenders.
In addition to flexible terms, some lenders also offer deferred payments. This allows businesses to have the flexibility to use their funds and resources during the initial period when their cash flow is limited. This makes a big difference and helps them minimize their expenses and remain viable.

One of the most appealing aspects of equipment financing is the ease of getting started. Business owners can apply for financing and be approved in a matter of hours rather than weeks or months as is the case with other financing models.
In addition to the convenience of applying using a finance broker also eliminates the long waiting times and paperwork. All of the paperwork is done in-house, and the borrower is not required to fill in extensive financial forms and documents. This makes the process of getting started hassle-free and significantly less time consuming than other forms of financing.
The simplified process and convenience of getting started give business owners the opportunity to obtain the necessary capital they need to make their business’ successful.

For more information call Principal Business Finance Ltd on 01604 217 998 or email info@principalbusinessfinance.co.uk. We look forward to hearing from you.