In business, time is money. When it comes to purchasing an asset for your business, you need a quick, no fuss finance solution. Because any down time could cost you that contract you have been working on, delay the operations of your business or slow it down. The wheels need to keep moving.
So how can you best position yourself when financing equipment for your business. Here are a few factors for you to consider:
Consult your Accountant
First and foremost, discuss the purchase with your Accountant / Tax Adviser. They will provide financial and taxation advice on:
The entity purchasing the asset.
The recommended loan structure.
General tax advice on future tax deductibility’s and benefits.
How the purchase will benefit the operations of your business.
The many incentives on offer by the Government and ATO for small to medium businesses, relating to asset purchases and the associated tax benefits.
It is also important for your finance broker to understand the advice you have been provided. They can liaise directly with your Accountant to ensure the correct loan structure.
Consult your Finance Broker or Lender, before you purchase
Quite often, consulting your Broker or Lender about the proposed terms of the finance can be an afterthought. However, it shouldn’t be. It is important to consult them before you purchase, so they can provide you with accurate loan terms – such as repayments, interest rate and fees. This will allow you to make an informed decision.
Pre-Approvals are a great idea, they allow the Lender to assess your application prior to purchase. Again, providing you with peace of mind that the funding is available, and the terms associated are accurate. Brokers do not generally charge for pre-approvals.
If you have Credit Impairment issues (i.e. credit defaults, writs or arrears), then disclose these upfront to your Broker or Lender. Lenders simply need to understand the reason for the credit issues, so they can be mitigated. There is a diverse range of lenders in the business equipment market, offering solutions for most customers and their businesses.
Prepare your business tax returns and financial statements
Lenders will often request the business tax returns and financial statements, to assess the underlying financial health of the business. These help to provide a snapshot of how your business is operating, and the asset/liability position. Having these immediately available will help speed up the loan application process,
After the 31st December, the incomes statements from the most recent financial year are required.
Prepare a Cash Flow
A cash flow forecast will help you better understand the impact of the purchase on your business. For example, how much revenue will the asset produce over a period, versus how much will it cost to run the asset. Will it be cash flow positive or negative.
It will help you make an informed decision about the purchase.
So, prepare a cash flow and discuss the projections with your Accountant or Business Advisor.
These are just some basic suggestions to help smoothe the process, when applying for your next business or equipment loans.
Be prepared, and it will be fuss free.
For more information on preparing for your next business loan, contact the team at yesapproved.com.au.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs.