A growing business needs to invest in assets to stay competitive and achieve its goals. But buying new equipment and machinery can strain your cash flow and tie up funds that could be used to accelerate growth.
Short-term Asset Finance can help you get the funding you need without tying you down to a lengthy repayment commitment. More and more Australian SMEs are turning to Asset Finance and other alternative lending solutions to support growth.
In our latest SME Growth Index, 27.4% of business owners told us they intended to fund growth using non-bank financing. Growth financing from main banks has halved since 2014, dropping to an all-time low.
Whether you need quick funding to replace old equipment or a cash injection to support your expansion plans, a flexible Asset Finance facility can provide the financial support you need.
What Is Asset Finance?
Asset Finance is an umbrella term that covers a broad range of funding solutions. A funding facility can help you obtain the assets your business needs to grow without meeting the high upfront cost of purchasing equipment outright. You can spread the investment cost over a more extended period to take the pressure off your cash flow.
This type of funding is helpful for businesses that have an opportunity to expand and grow but don’t have the liquidity to capitalise.
Asset Finance can also help businesses release capital tied up in machinery, equipment, and other assets that the company already owns. The asset provides security for the funding.
Read our guide How Asset Finance Works to see how asset finance could help you get more out of your business assets.
What Is Short-Term Asset Finance?
Short-term Asset Finance solutions are designed to help businesses quickly access the capital and equipment they need to grow and be competitive. Funding facilities typically have shorter terms compared to traditional funding options.
A traditional bank loan term ranges from 3-10 years. Strict lending criteria means that traditional funding is out of reach for many SMEs, and it can take up to 90 days for approval.
Short-term Asset Finance solutions are much more flexible, with terms ranging from 24-60 months and funding approved in as little as 24 hours.
There are two main categories of short-term Asset Finance: Equipment Finance and Asset Refinancing.
Short-Term Asset Finance Options
Purchasing equipment and machinery upfront can be risky, with the potential for cash flow problems. For many businesses, making a large upfront payment is not possible. Equipment Finance solutions help companies to get the equipment and tools they need to grow.
Hire purchase allows you to buy the asset you need and spread the cost over a series of repayments. The asset belongs to the business and appears on its balance sheet. Because your company owns the asset, you will be responsible for any maintenance costs.
The asset acts as collateral for the funding facility, so you don’t need to provide any additional security. You will take full ownership of the asset once the final repayment is made.
With a leasing arrangement, the finance company will purchase the asset you need and charge a monthly leasing fee. You can use the asset immediately without having to make a large upfront payment.
At the end of the contract term, you can continue to lease the asset, return it to the finance company, or purchase the asset outright for a nominal fee.
Leasing can be an effective solution for businesses that need to replace or upgrade equipment quickly. This form of short-term asset funding can also provide tax advantages. The asset will appear on the finance company’s balance sheet, and the repayments will be regarded as expenses that reduce your taxable income.
A chattel mortgage is a financing solution that allows you to use the asset’s value as collateral to secure funding. You can access the equipment you need without the cost of an expensive upfront payment.
The finance company will provide funding, and you make regular repayments over a set term. At the end of the contract, your business will take full ownership of the asset. Some funding facilities allow you to make lower monthly repayments with a balloon payment at the end of the term.
Your business is classified as the owner, and the asset is listed on your balance sheet. This means you can claim tax deductions up to the ATO’s depreciation limit.
Asset Refinancing is a funding solution that helps businesses to unlock the capital they have tied up in the assets they already own. If your company owns expensive machinery, vehicles, or equipment, Asset Refinancing allows you to release capital that can be used to support your growth plans.
Because the financing is secured against existing assets, the amount of funding you can access depends on the value of the assets you want to refinance. If you purchased the asset more than three months prior, a panel valuer will need to conduct a valuation to determine the amount of funding you can access.
Asset Refinancing isn’t just for established companies with lots of existing assets. Many growing businesses suffer from cash flow shortages after putting all of their available capital into purchasing a new asset.
A buyback funding solution can help you to quickly raise capital and maintain the use of the asset. The finance company will provide an immediate lump sum payment secured against the value of the asset. If you purchased the asset less than three months prior, you only need to submit the original invoice and proof of payment to secure funding.
The business will make regular repayments and take back full ownership of the asset at the end of the contract term.
How ScotPac Clients Have Benefited From Short Term Asset Finance
Our fast and straightforward Asset Finance solutions have supported the growth of Australian SMEs for over 30 years. We can help you take back control of your cash flow and get the equipment and machinery you need to grow.
Computertrans – Fuelling Growth with Equipment Finance
Equipment Finance has helped NSW transport company Computertrans to increase its fleet of 110 vehicles and achieve sustainable growth over the last decade. The company is an industry leader in the transportation and installation of high-value medical equipment and freight.
Computertrans uses an Equipment Finance facility with ScotPac to fund the purchase of new vehicles, machinery, and equipment. The Asset Finance facility has helped Computertrans fuel its growth plans and maintain its competitive edge with state of the art equipment.
Read more about Computertrans success story.
Shepparton Partners Collective (SCP) – Unlocking Growth Potential with Asset Refinancing
The nearly 100-year-old Australian food brand SPC is embarking on a new period of growth fuelled by ScotPac Asset Refinancing.
In 2019, the current owners purchased the brand from Coca-Cola Amatil with plans to expand into domestic and international markets. With capital tied up in plant technology and equipment, ScotPac Asset Refinancing provides the liquidity needed to fund the company as it takes on new opportunities.
SPC plans to establish itself as the Nestlé of Australia with ScotPac Asset Refinancing and Debtor Finance facilities providing the financial backing to help the company achieve its goals.
Find out more about how ScotPac is helping SPC to write a new chapter in its remarkable story.
Short-Term Asset Finance with ScotPac
Our flexible funding solutions help businesses of all sizes unlock the true value of their assets and get the equipment and machinery they need to succeed.
We believe that every business should be given the opportunity to grow.
If you’re interested in how short term Asset Finance can help your business succeed, speak to one of our friendly team of Asset Finance specialists today. Alternatively, you can use our simple online application form, and we’ll get back to you shortly to answer your questions and help you find a funding solution that allows your business to flourish.