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Update: The Australian and New Zealand operations of Bibby Financial Services were acquired by Scottish Pacific Business Finance in late 2015 to create Australia’s largest non-bank invoice finance specialist. Welcome to our website.

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Equipment Financing with the Updated Instant Asset Write-Off Scheme

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Whether it’s heavy industrial machinery, office computers or anything in between, having the right equipment is vital to the success and longevity of your business. Not only is it essential for completing daily tasks and increasing productivity, it’s necessary for long-term, sustained growth.

Of course buying equipment outright can be expensive and put a strain on cash flow, and simply isn’t a realistic option for all SMEs. Fortunately, equipment financing, where you receive a loan to invest in business equipment, is a viable solution and can be a huge help for growing and expanding your company.

And with the updates to the instant asset write off scheme for small and medium businesses in effect, now is the perfect time to use equipment financing to purchase new equipment.

 

Capitalising on the Instant Asset Write-Off Increase and Extension

In April 2019, the Australian government made an exciting announcement regarding the instant asset write-off. According to the Australian Taxation Office, “The threshold has increased to $30,000, and has been extended to 30 June 2020. The instant asset write-off now includes businesses with a turnover from $10 million to less than $50 million.” So if your business has a turnover of less than $50 million, you can claim a tax deduction on all new assets under $30,000. Check out this resource to learn more about the deduction thresholds and get the full details.

This makes it the perfect time to capitalise on EOFY discounts and purchase any new equipment you need, while getting the most from your tax returns. But don’t worry if you miss the EOFY sales, this scheme will still be relevant for the next financial year. Meaning spring-cleaning of your old equipment, business boom after the festive season, or the ramp up to next financial year close out are all good periods for you yo look to make the most of the updated incentive.

 

The Basics of Equipment Financing

If you’re wondering exactly how equipment financing works, the concept is pretty straightforward. A lender gives you a loan to purchase important business equipment that would be difficult to purchase outright. Examples could include a forklift for moving materials in a warehouse, an industrial-sized oven for a restaurant and an excavator for construction projects. However, it can also include more basic purchases like computers, scanners and copiers for the office.

Equipment loans provide you with funding to cover ongoing payments and include interest and principal for the agreed terms. Under this arrangement, a lender is essentially fronting you the money to pay for the cost of equipment. In some cases, they’ll provide you with a loan to cover the entire cost of the equipment. Other times, it will be up to a certain percentage (e.g. 80%) for larger purchases.

Unlike leasing where you rent business equipment for a monthly payment but don’t actually own the equipment during the lease term, equipment financing makes it so you purchase the equipment. So once you’ve repaid the loan and satisfied the terms, the equipment is yours. This makes it an effective way to obtain new equipment to grow your business or replace existing equipment if it breaks down.

At Scottish Pacific, we understand that SMEs have a wide variety of needs when it comes to financing equipment purchases, and we offer a few areas of specialisation including the following.

 

Imported Equipment Financing

We live in a globalised world where an increasing number of SMEs are importing products from around the world. In 2018 alone, Australia bought more than $330 billion AUD in imported products, which marked a 2.7% increase from 2017.

Besides simply buying inventory, many businesses are now choosing to obtain their equipment from international vendors as well. After all, it doesn’t matter where a company is located. It still needs the right equipment.

We understand this need and already import equipment with our market leading Tradeline product and trade financing options. But we’ve taken it one step further and now offer a simplified way for clients to import equipment as well. If this is something you’re interested in, Scottish Pacific can help.

 

2nd Hand Equipment Financing

Much of today’s business equipment is quite expensive. For instance, a standard capacity forklift can cost up to $36,000 AUD, while a 4,535 kilogram capacity forklift can cost up to $65,500 AUD. As a result, many business owners opt to buy 2nd hand civil equipment, which costs considerably less.

Although it’s not brand new, it still gets the job done and helps SMEs become more efficient and productive. Going the 2nd hand route is often a smart move for all types of companies, but it especially makes sense for newer businesses that are just getting off the ground. For those that are dealing with a lot of other expenses, buying used equipment can reduce initial operating costs considerably.

At Scottish Pacific, we also provide financing for 2nd hand civil equipment which many lenders often won’t, and we treat this as a new asset allowing for flexible options tailored to the needs of your business.

 

Capital Raising

If you’re looking for additional money to fund your business, we can use asset finance for legitimate capital raising. Maybe you need a cash flow injection to pay employees or suppliers. Or maybe you’re looking to quickly reinvest in your business and don’t want to deal with the rigidity of a conventional bank loan.

You can use your existing equipment as collateral and borrow money against what you already own. Our asset finance solution allows you to access additional working capital secured against your property, plant and equipment.

Asset financing offers several benefits:

  • Loans are often easier and quicker to obtain than traditional bank loans.
  • You’ll usually find fixed payments and interest rates, which makes repayment easy to manage.
  • It’s generally less risky than a secured bank loan. If you can’t make payments, you’ll only lose the equipment rather than your home.

When you put all of this together, it’s a viable move for many SMEs who are looking to accelerate company growth.

 

Getting the Equipment You Need

It’s common for business owners to feel overwhelmed with the craziness that comes along with preparing tax returns and transitioning from one fiscal year to the next. With all that’s happening, buying or replacing equipment may not be at the top of your to-do list.

But with the instant asset write-off being increased and extended into June 2020, it’s definitely something that deserves some thought. As long as your business has a turnover of less than $50 million, you can claim a tax deduction on all new assets under $30,000.

And if you need equipment financing, here at Scottish Pacific we have several options available to suit your needs. It’s just a matter of determining which specific solution you’re looking for.


Call us today on 1300 332 867 to discuss further, or click here to have us get in touch.

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