If you don’t have enough working capital to buy machinery and equipment outright, Asset Finance can be an effective funding solution. More and more Australian businesses are using Asset Finance to fuel their growth plans. According to the Commercial & Asset Finance Brokers Association of Australia, over $40 billion of new business equipment is financed each year.

Here’s what you need to know and what to look for if you’re considering using Asset Finance to fund the purchase of a new or second-hand business asset.

What Is Asset Finance?

Asset Finance is a form of business finance that is used to fund the purchase of vehicles, machinery, and other business assets. The value of the asset is typically used as security for the finance facility.

It allows businesses of all sizes to access the most efficient and advanced equipment they need to compete. Rather than paying for an asset upfront, you can spread the cost over a more extended period. Asset Finance terms typically run from 24 to 60 months.

The overall cost will be greater than if you purchased the asset outright. But Asset Finance can be a practical solution for businesses that don’t have enough capital to make a large one-off purchase or would prefer to spread the cost and use their available funds in other areas of the business.

You can also use Asset Finance to release capital from assets that you already own. This can be an effective funding solution for asset-rich businesses that suffer from cash flow gaps.

How Does Asset Finance Compare to Other Business Funding Options?

Asset Finance is a funding solution that helps business owners overcome a specific challenge. Raising capital to fund the purchase of a new asset can be extremely difficult.

While a credit card or overdraft can be beneficial for short-term cash flow needs, they can be costly if used to fund a large purchase over a long period.

Business loans can be used to purchase equipment and machinery. However, the strict lending criteria and extended application process mean this type of financing is often unsuitable or unavailable for many business owners. A traditional business loan will also reduce the likelihood of being able to borrow money at a later date.

With Asset Finance, the value of the asset is used as security for the funding facility. This reduces the finance company’s risk, which means businesses that don’t qualify for a traditional loan will usually be accepted for asset financing.

For most Asset Finance facilities, the funding is viewed as a contractual agreement and not as a loan. This can provide additional tax benefits and usually doesn’t impact your ability to seek funding later.

For a more detailed look at asset financing, read out post How Asset Finance Works: A Basic Guide to Getting the Most From Your Business Assets.

Advantages and Disadvantages of Asset Financing

Advantages

There are several advantages to using Asset Finance to fund large expenses, but there are also drawbacks that you should be aware of before entering into an agreement.

Low Upfront Cost
Asset Finance enables you to access the tools and equipment you need without having to make a large upfront payment. Rather than using your available capital to buy the asset outright, the finance company will buy the asset for your business. You can use the equipment immediately and spread the cost over smaller regular repayments.

Avoid Deprecation
Many business assets suffer from a sharp depreciation over a short period. For example, a new car can lose 40% of its value within a year of purchase. Asset Finance helps to reduce the risk of depreciation. For many funding facilities, the finance company is the asset owner until the final repayment is made and must replace the asset if it fails to survive for the term duration.

Increase Working Capital
Instead of tying up capital in an expensive business purchase, Asset Finance helps you maintain liquidity so you can invest in areas that will be more beneficial for the business. You can use the increased liquidity to support growth plans, negotiate discounts with suppliers, or take advantage of opportunities that require fast investment.

Predictable Expenses
In many Asset Finance agreements, the finance company is responsible for maintaining and managing the asset. You don’t need to worry about unexpected costs to keep the asset operational. It may also be the finance provider’s responsibility if the asset needs replacing before the end of the contract.

Keep Lines of Credit Open
By using Asset Finance to fund new equipment, you keep traditional lines of credit like bank loans open to be used at a later date. An Asset Finance facility can also sit alongside your existing funding arrangements.

No Security Required
In a typical Asset Finance agreement, the value of the asset you want to purchase is used as security for the funding facility. You don’t need to use your home or personal property as collateral.

Disadvantages

As with any form of business funding, Asset Finance has limitations that makes it more suitable for some businesses than others.

Ownership Of the Asset
You do not fully own the asset until the end of the contract term. With a commercial loan, you can borrow money to buy equipment and machinery outright. With Asset Finance, the finance provider will either own or hold a security interest in the asset for the length of the contract.

Not Suitable for Short-Term Funding
Asset financing terms generally cover a period of 24 to 60 months. If your business needs short-term funding to cover the cost of a one-off purchase, an Invoice Finance solution may be a more flexible alternative funding solution.

Limited Cover for Accidental Damage
Depending on the funding arrangement, maintenance and management costs are usually covered by the finance company. However, your business may be liable for any accidental or preventable damage to the asset.
Factors to Consider When Comparing Asset Finance
It’s important to compare your options so you can make an informed decision and choose an Asset Finance solution that is right for your business. Here are the factors you should consider.

Fees
Make sure you are aware of all the potential fees involved before entering an agreement with a financing company. You may be required to pay an initial application fee and ongoing monthly fees for the funding facility. If you plan to make additional payments, you should also be aware of any early repayment fees.

Type of Asset Finance
There is a range of different types of Asset Finance. If you plan to take full ownership of the asset at the end of the contract duration, you will likely require a chattel mortgage or hire purchase facility.

Repayment Schedule
Some finance providers offer a choice between a monthly or weekly repayment schedule. The costs can vary between these facilities, but you should seek a repayment schedule that fits your cash flow needs.

Contract Length
Generally, the longer the contract, the lower the cost of your regular repayments will be. But this also means that you will pay more in interest over the length of the contract. It’s always advisable to pay off business debt as soon as possible, but this shouldn’t stunt your business’s growth by limiting your access to working capital.

Total Cost
When you’re comparing Asset Finance solutions, you should consider the overall cost of the funding facility. The cost of monthly repayments can vary according to the lender, but the overall cost will help you determine how much your business will ultimately pay for the asset.

Asset Financing With ScotPac

There are lots of factors to consider when you’re choosing an Asset Finance provider. A funding facility can last for several years, so it’s essential to consider your current situation and your business’s future needs. Take time to compare your options and select a solution that meets the unique needs of your business.

If you need help understanding your options and finding an Asset Finance solution that works for your business, contact our friendly team of business finance experts today or use our simple online enquiry form.

MEDIA RELEASE

But one in four predict revenue decline, impacted by lockdown challenges in Victoria and issues in hard hit sectors

News editors: CEO interview, infographics and research data available on request

Cautious optimism in the six-month revenue forecasts of Australia’s small business sector highlights SME resilience – although the recovery is still uneven and varies significantly by state and sector.

ScotPac’s SME Growth Index is Australia’s longest-running in-depth research on small business growth prospects. The March 2021 results show almost half the 1253 business owners polled (48%) anticipate positive revenue growth for the next six months, growing on average by 4.1%.

This average revenue growth forecast has increased eight points from H2 2020, reflecting a strong “bounce back” in confidence for many small business owners.

However the proportion of SMEs expecting revenue to decline hit a new high at a critical moment on the road to long-term COVID recovery – one in four small businesses have forecast a revenue drop, on average by -5.5%.

Market-wide, the extremes for the SME revenue forecasts ranged from -10% to +9.1%, for a modest overall average revenue increase of 0.9% for the small business sector in the next six months.

Victorian SMEs are still reeling from the impact of lockdowns – only 10.5% are forecasting growth (but those that are expect a bullish 11.1% growth).

A full 63% believe their revenues will decline, by -6% on average. (see page 2 for complete State and Industry revenue forecasts)

ScotPac CEO Jon Sutton said revenue uncertainty is more marked at the smaller end of the SME sector, with $1-5 million revenue SMEs feeling the brunt more so than their $5m-$20m revenue counterparts.

“Overall the small business sector has rebounded well considering the depth of the challenge the pandemic created,” Mr Sutton said.

“But many SMEs are not out of the woods yet. There’s much uncertainty about the long-term pandemic recovery path for those SMEs weaning off government stimulus or coping with sector-specific challenges, in particular tourism, accommodation, retail and restaurants.

“For the businesses facing uncertainty, it’s crucial to focus on getting expert advice and putting in place sufficient funding to support recovery and growth,” he said.

The latest SME Growth Index marked a record broad distribution range of positive revenue forecasts (from +1.1% to +9.1%) highlighting that states and industries are rebounding at different rates.

State revenue forecasts and intention to close/sell
WA most bullish – 84.5% predict positive growth by an average +6%. Only four in every 100 expect revenue to decline (which corresponds with the percentage of WA SMEs who say they will close the business if outlook doesn’t significantly improve; 15.5% are considering selling).

In NSW 54% of SMEs expect revenue growth, by an average +2.7%; almost a quarter (23%) expect revenue to decline, by on average -1.1%. Almost one in 10 NSW businesses say they’d close if current conditions continue, while one in five would consider sell.

Outside of tourism hotspots, Queensland SMEs have been relatively unscathed. Only two in every 100 expect revenue to decline, by an average -5.8%. Almost half (48.5%) expect a modest revenue increase (+1.3%). 15 in every 100 SMEs are looking at closure, while 20 in every 100 may sell.

SMEs in South Australia and Northern Territory are bullish, with 73% expecting growth (by 3.2% on average) and 9% bracing for decline (by -2.3%). Fewer than one in five businesses in SA and NT believe they will have to close (13%) or sell (5%) if trading conditions don’t significantly improve.

Almost two-thirds (63%) of Victoria’s SMEs believe their revenues will decline over the next six months, by -6% on average. Only 10.5% are forecasting growth. More than half say without significantly improvement they will have to take drastic action, either to close (31%) or sell (27%).

Industry variations in revenue and business stability
Mining 90% expect revenue growth (by 8.5% on average), 5.6% forecast a decline

Manufacturing 36% forecast growth (by 1.1%), 33% say they’ll decline (-3.9% average)

Wholesale 37.5% expect growth (by 2.1%), with 29% forecasting revenue decline (-2.2%)

Retail 32% say they’ll grow (by 1.8%), but 39% expect to decline (by -5.3%)

Transport 59% forecast a revenue uptick (by 3.6%), with 10% expecting to decline (by -2%)

Business services 57% expect to grow (by 5.5%), 9% to decline (by less than a percent)

More than one in three retailers (36%) say they’ll close without conditions significantly improving, while one in three (33%) say they’ll sell. Fewer than one in 10 retailers are confident enough that they will not have to close or sell. Manufacturers also show uncertainty, with 19% looking at closing, 27% selling and 17% unsure. For transport, business services and mining, the vast majority felt they could ride out tough conditions without having to consider closing or selling.

SME Growth Index: Twice a year since 2014 market analysts East & Partners conduct this research, Australia’s longest-running in-depth research on small business growth prospects. In Jan-Feb 2021, a representative national sample of 1253 $1-20m revenue businesses were surveyed and interviewed.

ScotPac is Australia and New Zealand’s largest non-bank SME lender, and for more than 30 years has helped thousands of business owners with the working capital they need to succeed. ScotPac provides funding to small, medium and large businesses, from start-ups to enterprises exceeding
$1 billion revenues.

For more information contact:

Kathryn Britt
Director, Cicero Communications
[email protected]

Almost half the small businesses polled in the March 2021 SME Growth Index introduced new funding options in 2020 to deal with pandemic recovery and growth opportunities.
This large cohort of small businesses (46%) looked beyond their traditional funding methods to keep operations on an even keel, while 54% were able to get by using their existing style of funding.

The most common reasons for SMEs to turn to new funding options in 2020 were:

• to develop new products and services to diversify their revenue base (31.4%)
• to buy new or replacement equipment or machinery (24.4%)
• a desire to increase cash reserves (21%)
• to refinance existing loans (20.3%)
• traditional bank funding was unable to meet their needs (15.5%)
• not enough equity in their home to fund business requirements (6.9%)

Of the one in four businesses seeking new funding methods to invest in plant, equipment and machinery, the breakdown was 10% looking for new equipment and 14.4% looking to replace old. This modest demand for investment in plant reflects ABS data indicating that capital expenditure remains relatively suppressed despite the significant expansion of the instant write-off provision.
Only 2.6% of SMEs sought new methods of funding in order to hire new staff or train existing staff.

Early payment would have massive impact

Since the Index began in 2014, small business owners have indicated regularly that delayed invoice payment terms are a critical drag on cash flow and a significant source of stress.

SMEs are waiting on average 56 days to be paid, despite recent pushes by the Federal Government and ASBFEO to reduce payment times to 30 days (East & Partners has extrapolated that this results in up to $776b being held up in late payments annually for the SME sector).

This round, we asked SMEs how much of their working capital would be freed up for the business if they never had to wait for payment.

Small businesses said they would be able to access, on average, an additional 42.8% working capital.

Estimates of the boost to working capital ranged from 11% to an astonishing high of 67.7% for some small businesses.

For smaller SMEs (those with $1m-$5m revenue) not having to wait for payment would allow them access to an extra 31.4% in working capital.

This was even more marked for larger SMEs (businesses with $5m-$20m revenue) who would gain an average 55.6% more working capital if they were paid immediately.

Young and newly launched businesses (five years or under) are feeling this cash flow crunch more severely, with on average 58.8% of working capital tied up in unpaid invoices.

Businesses over five years old estimate they would gain an additional 35.6% in working capital in an ideal world where they never had to wait for payment.

In the real world small businesses do have to wait, often too long, for payment.

So it is important for them to secure funding that smooths out cash flow gaps and allows them the confidence to take on new opportunities.

Even better if they can do so without taking on further debt or relying on using their family home as security.

Market analysts East & Partners emphasise the need for small businesses to be properly funded in order for the sector to fully recover in 2021.

New ASBFEO head Bruce Billson, and RBA assistant governor Chris Kent, have both publicly stressed the importance of small business access to finance in recent months.

How SMEs will fund 2021 growth

Small businesses were asked how they intend to fund new growth in 2021.

As in previous rounds, the two main ways to fund new growth are by using their own funds (the top option for 89.1% of respondents) and by borrowing from a non-bank lender (now at a new high of 28.3%).

One in five small businesses (21.2%) will rely on new equity to fund growth.

Once again there was a decrease in the number of SMEs intending to use banks to fund new growth, despite the range of government stimulus measures linked to bank lending.

Only 16.8% of SMEs plan to fund new growth via their main bank and 12.3% plan to use other banks.

When only growth company responses are considered, one in four growth businesses (24%) intend to borrow from non-banks to fund new growth, 15.8% will turn to their main bank and 13.1% will borrow from another bank.

The RBA has noted that while business confidence has improved markedly, many smaller businesses remain reluctant to take out new loans.

This reluctance may indicate that business owners recognise it is not an optimal solution to simply add more debt onto already over-leveraged balance sheets.

One negative flow-on effect from this reluctance to take on new debt from traditional banking sources is that many businesses have simply “kicked the can further down the road” instead of sourcing more appropriate business funding solutions, according to East & Partners.

SMEs and their advisers are encouraged to download this free Business Funding Guide created by ASBFEO and ScotPac to outline styles of funding that might suit their business.

The guide aims to educate small businesses and their trusted advisers (such as accountants, brokers and bookkeepers) about a wide range of funding options for different business situations.

Strong sales figures don’t always translate into a healthy cash flow. When you make more sales, you need more working capital to pay your suppliers and process new orders. Even profitable businesses can struggle with liquidity while waiting for customers to pay.

“Poor cash flow is the primary reason for business insolvency in Australia.”

– Kate Carnell, Australian Small Business and Family Enterprises Ombudsman

In 2019, 51.2% of business failures in Australia were due to inadequate cash flow. Many businesses use Debt Factoring to cover cash flow gaps caused by extended payment terms and late-paying customers.

How Does Debt Factoring Work?

Debt Factoring is a funding solution that enables businesses to get paid faster for the products and services they have already sold. You can use your outstanding invoices to get an immediate cash injection.

Rather than waiting 30+ days for your customer to pay, you can submit the invoice to a Debt Factoring company. The factoring company will then provide a cash advance of up to 95% of the invoice value upfront.

When the invoice is due, your customer pays the factoring company, and they transfer the remaining balance of the invoice to you, minus a fee.

Debt Factoring Step By Step

Step 1: You invoice your customer as usual after fulfilling an order.

Step 2: You submit the invoice to the factoring company.

Step 3: The factoring company provides an immediate cash advance of up to 95% of the invoice value.

Step 4: Your customer pays the invoice.

Step 5: The factoring company pays you the remaining balance of the invoice less fees.

Why is Debt Factoring So Effective?

The problem for many businesses is that their customers are trying to manage their cash flow too. It’s rarely in the customer’s interest to pay for goods and services early, so the seller has to wait to be paid, causing a cash flow gap.

Debt Factoring helps businesses better manage their cash flow by getting paid faster for the goods and services they have already sold. It’s especially beneficial for companies that need to support working capital during periods of rapid growth.

You can access the money owed to your business within 24 hours of raising an invoice. With the increased liquidity, you can pay your suppliers, negotiate early payment discounts, and quickly reinvest in your business to fuel expansion.

How Does it Improve Cash Flow?

Debt Factoring improves working capital by bridging the cash flow gap between raising an invoice and receiving payment. Accounts receivable is often one of the most significant assets a company owns.

The average Australian business that employs three or more staff is owed over $22,000 by its customers. With the impact of COVID-19, the average time taken to receive payment has increased significantly.

Even before the pandemic, 50% of Australian companies reported that 4 in 10 invoices were being paid late.

For businesses without alternative funding sources, the business owner will have to use their personal savings to bridge cash flow gaps and support working capital. If you don’t have the money to hand, your business can’t take on more orders, and growth stagnates.

Debt Factoring helps to increase liquidity by releasing the capital that is tied up in unpaid invoices. You can access up to 95% of the value of your invoice within 24 hours, rather than waiting 30+ days.

You can overcome extended payment terms and late-paying customers and access the working capital you need to sustain your business growth.

The Ongoing Need for Working Capital

Managing working capital is one of the biggest challenges business owners face. A successful business needs consistent access to working capital to sustain growth.

While a traditional business loan can provide a one-off cash injection, it isn’t flexible to a growing business’s needs. As you process more orders and expand, you need access to more working capital.

Debt Factoring is much more flexible. It works similarly to a line of credit. As you make more sales and raise more invoices, the line of credit increases.

For example, if you raise invoices for $200,000 in April, you could immediately access up to $195,000 using Debt Factoring. With access to capital, you can reinvest in revenue-generating areas of your business, take on more orders, and increase your sales invoice value to $250,000 in May. Factoring your invoices in May will allow you to access up to $242,500 upfront to use in the next month.

With your working capital increasing in line with your sales invoices, you can confidently reinvest in your business and accelerate growth.

Other Advantages of Debt Factoring
Alongside improved cash flow management, Debt Factoring offers several other advantages, including:

Protection Against Bad Debts
Many factoring companies provide Bad Debt Protection as an extra service you can use to protect your cash flow from customers who cannot pay. Additionally, the finance company will only factor invoices for your creditworthy customers. This can help you to avoid overextending with customers that pose a risk of non-payment.

Reduce Overheads
In a factoring arrangement, the finance company will be responsible for managing your accounts receivable and collecting your customers’ payments. Instead of hiring a new staff member or setting up a collections department, the factoring company will handle these tasks for you.

Relieve Stress
The stress of chasing late payments and struggling to manage cash flow can be damaging to your mental health. Around 75% of Australian business owners have suffered serious mental trauma due to cash flow issues and having to chase payments from their customers.

With a debt financing solution, you can be confident planning your next steps, safe in the knowledge that you will be able to access the money you have already earned.

Designed for Small Business
Debt Factoring is a funding solution that is designed for the needs of small businesses. It’s much more accessible and flexible than traditional small business funding options. You can arrange a funding solution in as little as 24 hours, and there’s no need to use your home as security.

When is Factoring Not Suitable?

While Debt Factoring is a flexible form of funding that can be tailored to your business’s needs, there are some situations where it may not be suitable.

For example, if your business processes most customer payments through cash or credit cards, you may benefit more from a merchant cash advance or Asset Finance. Debt Factoring works best for companies that raise invoices for their goods and services and offer their customers net payment terms.

Because the finance company uses your customers’ creditworthiness to determine the risk involved before funding an invoice, Debt Factoring is only suitable for businesses that sell to customers with good credit ratings.

If you have customers with poor credit or who consistently fail to pay invoices on time, the finance company may offer Selective Invoice Finance as an alternative solution.

How Much Does Factoring Your Accounts Receivable Cost?

Debt Factoring is a highly flexible funding solution, and costs can vary according to the terms of the agreement. There’s a misconception that accounts receivable financing is expensive, but actual costs are usually similar to traditional bank funding solutions.

Factoring fees are usually calculated as a percentage of the total invoice value. The more risk involved for the finance company, the higher the factoring fee. The finance company will look at your sales volume, your customer’s creditworthiness, and other areas of your business to determine a factoring rate.

If need some help deciding if accounts receivable factoring is right for your business, read our post Is Invoice Factoring Worth It?.

Debt Factoring with ScotPac

We provide a range of flexible business finance solutions to help business owners unlock the hidden value in their company. You can receive a tailored Debt Factoring quote and get money in your bank in as little as 24 hours.

Our solutions can act as a primary source of funding or sit alongside your existing funding arrangements. Because our solutions are considered off-balance-sheet financing, they won’t impact your ability to secure more traditional financing at a later date.

Fill out a straightforward online application form or give us a call, and we’ll help you understand your options and create a tailored funding solution for your business.

Our most recent webinar explores the impact of JobKeeper ending last week, and how business owners and their advisors can prepare for the end of this stimulus package. ScotPac BDM Phil Freeman and special guest Steve Heavey of Hall Chadwick discuss JobKeeper, the ATO, cash-flow and the importance of planning. We’ve created a short summary of this webinar but if you’d like to view the full 30 minutes, watch it here.

With JobKeeper ending on March 31, what do businesses and their advisors need to prepare for?
Jobkeeper reliance in decline, as government support starts to wind down. Businesses and advisors need to prepare for a strain on cash flow, and now is the time to have a plan in place to access funds if they are needed. As it can take time to set up a facility or loan, it’s crucial businesses begin this process now.

Do we have any insight on what leniency the ATO might be ending come EOFY?
There’s been signaling in the market that the ATO will start to retrieve some of the millions of dollars owed. It’s important to work out if your or your client’s business is capable of entering in to an arrangement with the ATO if required. Otherwise, the best approach is to ensure you have the cash flow to cover these payments and if not, where you can find it. Traditional bank loans are usually a businesses first option, and if they are not attainable our blog article  Non-Bank Lenders: Explained covers off additional funding options.

What are some solutions for businesses who need immediate access to cash or need to cover wages?
Start  planning now – if you are cash strapped how can you access funds? What would happen if an amazing business opportunity came along – would you have enough cash or access to funds? A comprehensive list of funding solutions can be found here: Compare Small Business Finance Solutions or our article on How To Improve Your Cash Flow During a Recession  guides you through the importance of cash and practical steps you can take.

What’s the current appetite of the lending market?
The major banks are starting to get very competitive, and have their credit appetites in place. There’s been a 29% increase in credit enquiries month on month so we’re starting to return to a level of normality with businesses looking at their forecasts and planning for the future and growth. In the lending and funding market, it ultimately comes down to market share and getting good quality businesses in the door. Read more about different types of lending in our article Types of Business Finance

What actions do business owners or their advisors need to take now?
When looking at a business re-shape plan, the main thing business owners and advisors need to consider is their cash flow. Cash positions need to be optimised wherever they can, like reviewing expenses and negotiating with suppliers. Creating a Cash Flow Forecast is imperative to business success, which will help identify potential strains on cash flow so you can start to prepare. Taking control of your cash flow can be simple using a solution like getting an overdraft from your bank, increasing credit limits on current facilities or exploring an option like Invoice Finance, which gives you access to the money you are already owed by customers rather than waiting for them to pay. These funds can be used to pay the ATO or ensure you’ve got the cash to cover wages, now JobKeeper is ending.

If you would like to speak to a cash flow specialist about your business, or your clients business, get in touch today on 1300 177 485.

As JobKeeper ends, many are still looking to close or sell unless market conditions improve

March 26, 2021: A national survey of 1253 small businesses has found signs of improved SME confidence, although many businesses remain uncertain about their road to recovery.

The March 2021 ScotPac SME Growth Index recorded two positive signs of small business recovery – more owners are planning to invest in their businesses in 2021 compared to last year, and there has been a significant rise in average revenue growth forecast for the first half of the year.

The twice-yearly SME Growth Index is Australia’s longest-running in-depth research on small business growth prospects. East & Partners polled 1253 SMEs nationally and found 685 of them plan to invest in their own growth over the next six months (in late 2020, only 650 were willing to invest).

ScotPac CEO Jon Sutton said the Index recorded an eight-point rise in average SME revenue growth forecast for the first half of 2021, reflecting a strong bounce back in confidence for many businesses.

Mr Sutton said all of these “green shoots” are a promising sign that the small business sector as a whole has withstood the worst of the economic impact of a one-in-100-year crisis.

“After a year facing pandemic and recession, there’s now a sense of SMEs really wanting to get back to business as usual,” he said.

“But despite these positive signs, our research shows the recovery is uneven and varies significantly by state, region and industry. There are still many small businesses who are doing it tough.”

As JobKeeper ends, still signs of uncertainty for SMEs

The study asked SMEs about their strategies for recovery and growth in 2021. Two-thirds of small businesses (65%) say they will make changes to the structure of their business in 2021, in order to recover from the pandemic or to take advantage of opportunities, Mr Sutton said.

“This SME intention to restructure includes looking at other ways to fund their businesses.

“I believe business owners are on the right track with this intention, because to be in a position for recovery and growth it’s essential to have adequate funding in place.”

There remains a high level of uncertainty around recovery: 34% of SMEs say without significant market improvement they’ll close or sell their business, an increase from 31% who were considering these options in 2020. Only half those polled had NO plans to close or sell.

Other signs of SME concern about recovery include:

• 1 in 4 SMEs are unsure about how to recover
• Almost 1 in 4 had cashflow issues after being declined from a lending product
• 1 in 5 have to cut costs to replace stimulus funds
• Almost 1 in 5 will make arrangements with the ATO to manage their cashflow
• 1 in 6 will replace stimulus funds by using working capital finance

When asked how they feel about running their business now compared to before the pandemic, 44% of SMEs expressed confident sentiments while 55% highlighted more pessimistic feelings.

More than one in three (37%) are more positive or relieved about prospects for their business now than they were at the start of 2020. The full sentiment breakdown was:

• 19% feel more positive than in early 2020
• 15% are less positive
• 18% feel relieved
• 16% are exasperated
• 15% feel uncertain
• Only 7% are enthusiastic
• Almost 1/10 SMEs believe they didn’t get enough support

Mr Sutton said small business owners’ desire to “get back to business as usual”, combined with their uncertainty about how to achieve this, highlights the need for SMEs to seek expert advice.

“Given how bad things could have been, you could say it’s astounding how well the SME sector came through such a challenging year,” he said.

“There are positives, but we have to be realistic about what lies ahead. We still have half of the businesses polled this round saying they are not yet ready to invest back into their business.

“It will be hard for the economy to really take off until more small businesses are comfortable and willing to do so.

“Many businesses are forecasting growth, but many are not out of the woods yet.

“Regardless of whether their focus is growth or recovery, it is crucial that they secure appropriate funding and seek good advice to put themselves in the best position to achieve it.”

SME Growth Index: Australia’s longest-running in-depth research on small business growth prospects has been conducted twice a year since 2014 by market analysts East & Partners. In Jan-Feb 2021, a representative national sample of 1253 $1-20m revenue businesses were surveyed and interviewed.

ScotPac is Australia and New Zealand’s largest non-bank SME lender, and for more than 30 years has helped thousands of business owners with the working capital they need to succeed. ScotPac lends to small, medium and large businesses, from start-ups to through to enterprises exceeding $1 billion revenues.

For more information contact:

Kathryn Britt
Director, Cicero Communications
[email protected]
0414 661 616

Being able to invest in new machinery and equipment can be the boost your business needs to grow and compete in new markets. But upgrading, replacing, and buying new machinery outright can be expensive.

A considerable outlay on new or even second-hand machinery can significantly impact working capital and stretch your finances. That’s why many businesses use equipment finance to fund the purchase of the machinery and equipment they need.

In 2018, leasing and Equipment Finance accounted for 40% of equipment capital expenditure in Australia.

If you’re looking to fund the purchase of new machinery, this guide will help you understand your options and what to look for in an Equipment Finance facility.

Types of Machinery Finance

Even if you don’t qualify for a bank loan or overdraft, you will likely be eligible for Equipment Finance. Funding providers generally use the value of the machinery you want to buy as collateral for the financing facility. That means Equipment Finance is much more accessible than traditional funding methods, and solutions are flexible and can be tailored to your business’s needs.

There are three main types of machinery finance, including:

Chattel Mortgage
A chattel mortgage is a financing arrangement that allows a business to get a loan from a funding provider to purchase the machinery they need. The chattel (machinery) is used as collateral to secure the finance.

Over the agreed financing period, the business makes regular repayments to the funding provider until the loan and interest are repaid. With a chattel mortgage, the ownership of the machinery is transferred to the business directly after the purchase.

Hire Purchase
A hire purchase solution is when the funding provider agrees to purchase the machinery that the business needs. The machinery is then hired to the company over a set contract term. The business makes regular repayments for the contract duration.

The business can use the machinery immediately and takes ownership when the final repayment has been made.

Finance Lease
A finance lease is a funding solution that allows businesses to access the machinery they need with no upfront payment. Similar to hire purchase, the funding provider purchases the machinery for the company to use. The business then makes regular repayments over a set contract length.

At the end of the contract, the business can purchase the machinery for a nominal fee, give the equipment back, or continue to lease the machinery from the funding provider.

Is Security Required?

No. For the vast majority of Equipment Finance arrangements, the machinery being purchased acts as security for the funding. You don’t need to use your home or property as security. If you default on the repayments, the machinery may be repossessed by the lender to cover the purchase cost.

You can use Equipment Finance to fund up to 100% of the cost of an asset. Depending on the terms of the arrangement, you may be able to reduce the monthly repayment and interest charges by providing an upfront deposit.

How to Work Out Your Budget

It’s essential to set a budget and know what you can afford before seeking finance. Your equipment budget will depend on the size of your business and the specific machinery you need.

The first step is to contact suppliers and get pricing quotes. You’ll also need to account for the costs of repairs and maintenance. The supplier or the finance provider may cover these expenses, but it’s helpful to know these costs when setting your budget.

You can also use Equipment Finance to fund the purchase of second-hand machinery. When you’re working out your budget, consider whether you need a new piece of machinery or whether a second-hand option can provide what you need at a more affordable price.

Prepare Your Business Information
Before applying for machinery finance, prepare your business information and ensure that your financial records are up to date. The application process will be much faster and smoother if you have this information to hand.

Generally, the finance provider may want to see information that proves your business’s financial strength, including bank statements and cash flow forecasts.

Read our guide on creating a cash flow forecast to help you determine how much you can afford in repayments and how new machinery could improve your capacity and profitability.

The finance provider will also want to see a supplier quote for the equipment you wish to purchase.

Sorting out this information before you apply for finance can help the application process progress quickly and demonstrate to the funding provider that you understand your business needs.

Interest Rates

When you’re evaluating Equipment Finance quotes, the interest rate should be one of your key considerations. The interest rate will make a significant impact on the total cost you pay for the machinery.

Finding a finance provider that offers a low-interest rate should be a priority. Get Equipment Finance quotes from several providers to see how the interest rates compare before entering into a financing agreement.

Tax Benefits

Depending on the type of machinery finance you choose, you may be able to get tax benefits that reduce your taxable income.

You may be able to claim the monthly repayment and interest charges as a tax deduction. For some financing arrangements, you may also be able to claim the depreciation value of the machinery up to the maximum limit set by the Australian Taxation Office.

Your tax advisor or accountant should advise you which type of Equipment Finance will offer the most tax benefits and is the best fit for your business.

To find out more about how Equipment Finance could help your business, read our guide The Benefits of Equipment Finance.

Repayment Options

It’s important to work out the repayment terms you can afford before entering into an agreement. Once you have set out your budget, you can negotiate repayment terms that suit your business needs.

Equipment Finance terms can range from 24 to 60 months. Generally, the shorter the terms, the lower the amount you will pay in interest, but the higher your monthly repayments will be.

One of the most significant benefits of Equipment Finance is the ability to get the machinery and equipment you need without stretching working capital. You should negotiate repayment terms that allow you to pay back the sum owed without significantly disrupting liquidity.

Many businesses choose to make a lower monthly repayment with a balloon payment due at the end of the financing terms. A balloon payment is a lump sum due at the end of the contract to finalise the purchase of the equipment. This can allow for better cash flow management if your business is susceptible to seasonal sales or cash flow gaps.

Fees & Charges

Make sure you fully understand the terms and conditions of the equipment financing arrangement. You should establish what is included in the repayments and if there are any additional charges, such as account management and set up fees.

If you plan to pay down the finance before the end of the term, it’s also important to know if there are any early repayment charges.

ScotPac Machinery Finance
We provide a range of financing solutions to help businesses purchase the equipment they need to compete here in Australia and in international markets.

Our team of business finance specialists can put an Equipment Finance facility in place that gets you the machinery you need in less than 24 hours.

Use our simple online Equipment Finance enquiry form, or speak to our friendly team today and we’ll create a tailored solution for your business.

Finding a way to raise capital can be one of the most challenging and important tasks for a business owner. While traditional bank loans are often the first solution that comes to mind, strict lending criteria makes this option unavailable for many small business owners.

For SMEs in operation for less than 5 years, banks reject 38% of business loan applications. With a high rejection rate, it’s no surprise that many business owners turn to alternative small business finance solutions.

There are many ways to raise capital without getting into long-term debt or putting your home at risk. In this post, we’ll compare some of the most used small business finance solutions to help you find a funding option that’s right for you.

8 Alternative Small Business Funding Solutions

1. Asset-Based Lending

Asset-based lending is a finance solution that enables a business to release capital from the assets it already owns. For example, if you run a logistics business and have lots of your cash tied up in your fleet of vehicles, you can use those assets as collateral to secure funding through asset-based lending.

The finance company will provide a cash advance, and you make regular repayments until you have paid back the principal and interest. This form of funding can be an effective way for businesses short of working capital to unlock the cash they have tied up in their assets. You can get a fast cash injection and still be able to use the equipment and machinery you choose to refinance.

2. Lines of Credit

A line of credit works similarly to a bank overdraft or credit card. The financier will provide access to an agreed amount of credit. The business can draw down and repay the credit as and when it is needed to support working capital. Interest is only charged on the amount of credit that is used.

Typically, lines of credit are for more substantial amounts than a business could access through an overdraft. This form of small business finance can support a company’s cash flow needs but generally should only be used for short-term debt. The rates of interest and fees can be high if the credit is used for long-term funding.

3. Invoice Finance

If your business offers extended payment terms to its customers, you could benefit from an Invoice Finance facility. This finance solution is designed for companies that suffer cash flow gaps due to net payment terms and late-paying customers.

According to the ASBFEO, nearly 40% of Australian small businesses suffer from cash flow pressures due to late-paying customers. Small businesses that sell to large companies are especially at risk, with 50% of their invoices paid late on average.

Invoice Finance allows you to turn your outstanding invoices into an immediate cash flow injection. You can receive up to 95% of the invoice value as a cash advance. Once your customer has paid the invoice, the finance company will pay you the remaining balance of the invoice less fees.

To qualify for Invoice Finance, you’ll need to raise invoices for your products and services, and your customers will need to be creditworthy. Invoice Finance is an umbrella term that covers factoring and discounting.

Read our guide Invoice Discounting vs. Factoring to see which solution is best suited to your business.

4. Merchant Cash Advance

While Invoice Finance is designed for businesses that sell to other businesses, a merchant cash advance is better suited to those that sell directly to consumers.

A merchant cash advance is a type of small business finance that allows a company to use its future credit card sales as collateral to access immediate funding. You can receive an upfront cash advance based on your average card sales income.

The cash advance is repaid automatically over a set period. When a customer pays by card, a percentage of the sale income is deducted to repay the principal and interest.

A merchant cash advance can be a good option for businesses that process a large number of card payments and have seasonal sales fluctuations. The amount you repay is tied to your card sales revenue.

To find out if this type of small business finance is right for you, read our post, The Pros and Cons of a Merchant Cash Advance.

5. Equipment Finance

Equipment Finance is a funding solution that enables businesses to purchase the equipment they need and spread the cost over a more extended period.

The financing company will purchase the asset so the business can immediately put it to use. The business will then make regular repayments to cover the value of the asset plus interest. Depending on funding facility terms, the business will take ownership of the asset after the final repayment is made.

This form of small business finance can be an effective solution for companies that lack sufficient capital to purchase or replace equipment. You can access the tools, machinery, and vehicles you need to expand and increase your capacity and use the additional revenue generated to cover the cost of the finance. Payment terms range from 24 to 60 months, and funding can be used to purchase both new and second-hand assets.

6. Trade Finance

Trade Finance is a flexible type of small business finance designed to help companies release the capital tied up in the supply chain. You can use the increased liquidity to fulfil larger orders, offer extended payment terms to customers, speed up sales cycles, and boost revenue.

For buyers, Trade Finance can provide a revolving line of credit to increase your purchasing power and pay your international and domestic suppliers. Trade Finance can also include Letters of Credit, Documents Against Payment, and other financial instruments to help reduce the risk of dealing with international suppliers.

For sellers, a Trade Finance facility can help you bridge cash flow gaps caused by extended payment terms and maintain liquidity to take on more orders and speed up your sales cycles. Instead of waiting for your invoice to clear, you can get paid upfront and immediately reinvest the funds into your business.

7. Crowdfunding

Crowdfunding has seen a considerable increase in popularity over the last decade. You can raise capital by promoting your business on a crowdfunding platform and asking for contributions from investors and potential customers.

Most crowdfunding campaigns involve an exchange of equity for investment, but you can also offer future rewards or products as an incentive for contributions.

However, the average crowdfunding campaign generates less than $700 AUD. To gain traction and raise enough funding, you’ll need to provide an innovative service or product and be prepared to dedicate significant time to marketing and promotion.

8. Business Credit Cards

Business credit cards are one of the most well-known forms of small business finance. The lender will set a credit limit, and you can use the card to cover purchases and short-term cash flow gaps. Card providers may charge an annual fee for the credit facility, and you’ll need to make regular repayments to cover the principal and interest.

Most business credit cards offer an interest-free period of 30+ days. If you clear the balance in this time, credit cards can be an affordable short-term funding solution.

But fees and interest can quickly mount up if you don’t clear the balance. You can fall into expensive long-term and damage your credit score if you don’t manage your business credit card correctly.

Finding the Right Small Business Finance

There are plenty of options when it comes to small business finance. Even if you’re one of the many business owners that don’t qualify for a bank loan, you can use one of the above funding solutions to raise capital.

As with any financing, you should take your time and avoid rushing into any funding arrangement. Ensure you understand the terms, check the interest and fees involved, and know the pros and cons before deciding on the right option for your business.

If you need help securing the capital you need to grow your business, contact the friendly team of business finance advisors here at ScotPac. We’ll help you to understand your options and find a funding solution that works for you.

Nine million Australians want to start a business, but 60% of those potential business owners state that lack of funding is the biggest obstacle to becoming their own boss.

It’s not just new business owners that struggle to secure financing. Due to the strict lending criteria required by banks, many businesses are unable to get finance from traditional sources and are left looking for alternatives.

While bank loans and credit cards are well-established funding sources, non-traditional finance has become an increasingly more widely used way for businesses to access the funding they need.

Despite the sharp increase in non-bank business lending, Australia still lags behind its international peers when it comes to the use of alternative business finance. The average business owner is still relatively unfamiliar with non-bank lending.

Who Are Non-Bank Lenders?

Alternative lenders offer a range of financial products to help businesses. Unlike a traditional lender, non-bank lenders do not hold a full banking license. They provide competition to banks, offering more flexible and accessible funding solutions. Non-bank lending covers a range of financial institutions and service providers, including:

Insurance Companies
Insurance companies offer protection to businesses in the event of damage, theft, and other events that could damage business property or financials. They are considered a non-bank lender as they do not hold customer deposits, provide a financial product, and charge businesses a monthly repayment premium.

Most businesses use insurance products to cover short and medium-term risks to business property, vehicles, stock, and other assets.

Investors
If you are looking to raise capital for your business, you may seek out a non-bank investor. In exchange for lending money to the business, the investor will either charge interest and expect regular repayments on the debt or buy equity in the company.

This form of non-bank lending is a broad category that can include family and friends, hedge funds, investment advisors, and peer-to-peer lenders.

Non-Bank Lenders
Non-bank lenders provide direct funding to businesses through a range of financial products. Solutions can include debtor finance, Equipment Finance, and merchant cash advances, among others.

Australian non-bank lenders are not required to meet the strict lending criteria of banks. They can be much more flexible with whom they can lend to and how quickly they can provide funding. With traditional lenders increasingly risk-averse and unwilling to lend to small businesses, non-bank funding solutions have seen a significant increase in usage over the last 10 years.

E-Commerce Lenders
E-commerce lenders have grown with the global boom in online sales. Many e-commerce businesses are reliant on third-party companies to sell products and accept payment from customers.

Payment processing companies like PayPal provide funding based on the number of payments an e-commerce business receives. Companies can obtain financing with repayments automatically deducted at the point of sale when PayPal processes a customer payment.

E-commerce giant Amazon also provides funding to businesses that have stock held in Amazon warehouses. The stock acts as collateral for funding, with Amazon deducting repayments from the seller’s account every two weeks.

Are Non-Bank Lenders Safe?

Lending from a non-bank lender is just as safe as getting a loan from a traditional bank. Because non-bank lenders are not as well-known and do not have a banking license, many business owners mistakenly see non-bank lending as less secure.

There’s a misconception that non-bank financial products are riskier than traditional bank loans and credit cards.

A non-bank lender cannot take a deposit, and the financial products do not involve your existing business funds being transferred to the lender. The only transaction to the lender is the repayment of the money you have received as an advance plus any interest and fees.

While non-bank lenders are not subject to the same licensing and regulation as traditional banks, they still have to follow Australian laws. They are regulated by the Australian Securities and Investment Commission (ASIC).

What Are Some Risks Tied to Using a Non-Bank Lender?

Using a non-bank lender involves the same risks associated with getting a loan from a traditional bank. It’s just as important to make sure that you understand the terms, conditions, and rates involved with the funding.

As with any form of business financing, you should be cautious about taking on debt and only borrow what you need and can afford to repay. Take time to understand any one-off and ongoing fees involved, and be aware of the interest rates when deciding on a financial product.

Unlike traditional funding solutions, non-bank financial products are often considered off-balance sheet forms of financing. They do not impact your ability to secure funding from other sources, and applications generally do not affect your credit score.

However, you should make sure you meet the criteria set out by lenders to avoid any unnecessary loan rejections that could negatively impact your credit score.

What Are the Most Common Products Offered by Non-Bank Lenders?

Non-bank lenders like ScotPac offer a range of different financial products. These innovative solutions provide more funding options to businesses. Because non-bank lenders aren’t subject to strict bank lending criteria, they can provide flexible funding solutions tailored to your business’s needs.

Invoice Finance

Invoice Finance is a non-bank financing solution that allows a business to use its account receivables to access immediate funding. You can release up to 95% of the capital tied up in your outstanding invoices in the form of a cash advance. When your customer pays the invoice in full, you receive the remaining balance of the invoice less fees.

There is no property security required, and funding limits increase in line with sales. The more sales a business makes, the more funding it can access through Invoice Finance.

Invoice Finance solutions typically fall into two categories; invoice factoring and invoice discounting. The main difference between the solutions is confidentiality and the responsibility for the collection of the invoice. With invoice factoring, the non-bank lender is responsible for collections and deals directly with the customer.

Read our guide What is Invoice Finance? to find out more about both Invoice Finance solutions.

Trade Finance

Trade Finance is a non-bank form of financing that helps importers, exporters, and businesses that sell to other businesses. The financing solution allows a company to release capital tied up in the supply chain and fund the purchase of new stock and raw materials.

It’s an effective solution for businesses that suffer from cash-flow gaps due to extended payment terms offered to customers. A funding facility can act as a revolving line of credit that can be used to pay both domestic and international suppliers.

Trade Finance facilities can also involve Letters of Credit and Documents Against Payment to help mitigate the risk involved with international trade. When combined with an Invoice Finance facility, a Trade Finance solution can provide funding to cover up a cash flow gap of up to 180 days.

Take a look at our guide How Trade Finance Works to find out more about the solution and whether it’s a good fit for your business.

Asset Finance
If a business needs to upgrade, replace, or buy new equipment or machinery, an Asset Finance solution can effectively spread the cost and improve cash flow management.

Many businesses need expensive equipment to expand and compete. A solution like Equipment Finance can provide funding so the company can get the equipment it needs without disrupting cash flow and tying up capital in high-value assets.

Finance solutions allow you to spread the cost of equipment, machinery, and vehicles over a more extended period. Terms range from 24 to 60 months.

Asset Finance can also be used to help businesses release capital tied up in the assets they already own. If you could use an injection of working capital to fund expansion or capitalise on an opportunity, you can use your existing assets as collateral to access a line of credit.

Read our guide How Asset Finance Works to see how a funding solution can help your business.

Non-Bank Business Funding with ScotPac

Even if you’ve been rejected for a traditional business loan, there’s a good chance you will still qualify for a non-bank funding solution. There are plenty of alternative funding options to help your business get the funding it needs to grow.

To find out more about non-bank business lending, contact our team of friendly business finance advisors today. We’ll walk you through your options and create a tailored solution to your business’s unique needs.

To offer the best service to your customers and run an efficient operation, you need to be working with the right equipment. But purchasing new or even second-hand equipment can put a severe dent in your working capital.

That’s why many Australian businesses use finance to cover the costs of new equipment and maintain liquidity. With traditional lenders becoming more risk-averse and unwilling to provide funding, Equipment Finance is an increasingly popular solution for Australian businesses.

In our SME Growth Index Insight Series, 27.4% of SMEs told us that they intended to finance new growth using non-bank funding. Main bank funding is at 17.4%, its lowest since our first Index back in 2014.

In this guide, we’re going to cover everything you need to know about Equipment Finance to determine if it’s a good solution for your business.

What is Equipment Finance?

Equipment Finance is a financing solution that enables businesses to access the funding they need to purchase equipment. Funding is usually provided in a fixed-term loan repaid in regular instalments over 24 to 60 months.

The funding allows the business to spread the cost of purchasing equipment over a more extended period and use the additional revenue the equipment generates to pay for the finance cost. Equipment Finance can be used to fund:

• Business equipment
• Machinery
• Vehicles
• Technology

In contrast to a traditional loan, Equipment Finance is much more flexible and accessible. Because the asset’s value acts as collateral for the funding, you don’t need to put your home or property at risk to secure financing. The funding facility can sit alongside your existing finance arrangements and can be combined with other financial products.

Read our post, The Benefits of Equipment Finance, to see how a funding facility could help your business.

How Does Equipment Finance Work?

Using Equipment Finance, you can fund your business’s growth and development even if you don’t have readily accessible capital. Equipment Finance allows you to upgrade and replace old equipment without straining your finances.

For example, let’s say that you run a distribution and logistics business. To grow and take on new clients, you need to purchase a new forklift. The new forklift will cost $20,000 to $45,000, and the battery and charger will cost an additional $2,000 to $5,000. This means you need to raise up to $50,000 to purchase the equipment you need.

With Equipment Finance, you can fund up to 100% of the forklift value and spread the cost over a period of 2 years. With the new forklift, you can expand your capacity and take on new clients to raise additional revenue to pay for the financing and grow your business.

At the end of the financing period, you will own the forklift or have the option to purchase it for a nominal fee depending on the terms of the Equipment Finance facility.

Business Equipment Financing

Business equipment includes all of the tools, technology, and vehicles you need to run your business, including:

• Forklifts
• Manlifts 
• Excavators
• Machinery
• Tractors
• Vehicles
  

Around 30% of SMEs feel they have missed out on opportunities due to a lack of funding access. With Equipment Finance, you can capitalise on opportunities and fuel your business’s growth by funding the purchase of the equipment you need. It can allow you to increase productivity and revenue while maintaining a consistent positive cash flow.

Commercial Equipment Financing

To offer professional and scaleable services and products to your customers, you need commercial equipment. In simple terms, commercial equipment is machinery, tools, and apparatus designed for a commercial enterprise. For example, if you run a cake shop, you need commercial ovens, fridges, etc.

Commercial equipment is built to withstand the intensive daily usage of commercial operation. More heavy-duty and robust than equipment developed for the consumer market, commercial equipment is also more expensive.

A fridge designed for home use ranges from $500 to $2,000, while a commercial display fridge can cost up to $20,000. The cost of replacing or purchasing new commercial equipment can make a significant impact on cash flow.

Equipment Finance allows you to fund the purchase of commercial equipment. A funding facility can be put in place for a single piece of equipment or to fund multiple upgrades.

Small Business Equipment Financing

Equipment Finance is a funding solution designed for the needs of small businesses. In Australia, small businesses account for 98.4% of total businesses and contribute $418 billion to GDP – the equivalent to 32% of Australia’s economy.

Despite being a hugely important contributor to the economy and local communities, small businesses have increasingly found it difficult to access funding. With banks and traditional lenders becoming more risk-averse, innovative funding solutions like Equipment Finance have helped small businesses get the funding they need.

Equipment Finance can be used to upgrade or replace existing equipment with more efficient models. If you have a long trading history, you will find it easier to qualify and access more favourable credit terms.

New Business Equipment Financing

Start-ups and new businesses typically find it hard to qualify for bank loans and other traditional funding solutions. Equipment Finance is much more accessible, even for businesses without a long track record or credit history.

You can fund the purchase of the equipment and machinery needed to make your new venture a success. Because the equipment acts as collateral for the funding facility, you don’t need to provide a large deposit or use your home as security.

Rather than tieing up capital in an expensive asset, you can invest in marketing, staff, and other business areas that will help you increase revenue and profit.

To see how Equipment Finance can help a business fuel growth, read our case study on NSW transport business Computertrans.

How Long Can You Finance Equipment?

The length of an Equipment Finance funding facility depends on the value of the equipment you want to buy and the amount you can afford to repay each month. Funding terms range from 24 to 60 months.

Some businesses choose to make a lower monthly repayment to better manage working capital, with a balloon payment due at the end of the agreed contractual term.

How Can I Get Business Equipment Financing?
The right equipment can make a huge difference to the profitability of a business. You can fund the purchase of new and second-hand equipment with a ScotPac funding facility.

Most business owners need to move quickly to replace, upgrade, or acquire new equipment to capitalise on opportunities and avoid disruption to operations. While the application process for a traditional loan can take several months, we can put a funding facility in place in as little as 24 hours.

Use our straightforward online enquiry form or give us a call and speak to one of our friendly business finance advisors. We can quickly help you get the equipment you need to grow your business.