Finding a finance agreement best suited to your business needs can be overwhelming when new to the world of finance. Therefore, we thought it best to write a blog outlining your options when it comes to leasing and asset finance for your dental business. See below for more information on finance options for businesses.
What are my finance options?
This is our most popular service, as it allows you to own the asset once all payments have been paid in full. The cost can be spread over a term of usually 1 to 5 years.
However, depending on the agreement, you could be responsible for the maintenance of the asset.
This is ideal for assets that don’t require updating. For example, an appreciating asset, this means an asset that increases in value over time. Or simply an asset that you know you won’t need to refresh any time soon.
However, please bear in mind that with this finance option VAT is to be paid in full upfront with your first monthly payment.
Equipment leasing and finance
This usually involves a lender leasing an asset to you over an agreed period. You will then again repay the lender in monthly instalments until your lease term is up.
This is the most cash flow efficient way of leasing as it ensures a big sum of cash isn’t taken out of your business all at once.
So, if your aim is to ease up your cash flow whilst also obtaining your desired equipment, then this finance option might be the best one for you.
Though, unlike a hire purchase you most likely will not have ownership of the asset once the agreement is over. However, each lender has different terms, so depending on your needs, a finance agreement could be made tailored to you.
A finance lease, AKA a lease rental, is typically where the finance company purchases your chosen asset to then lease back to you.
Many businesses opt for this form of finance due to the tax benefits that come with them. Lease rentals are fully deductible against your company’s corporation tax. To add, the VAT is spread along with the repayments instead of having to pay it all in a hefty lump sum.
An operating lease is similar to a finance lease, the main difference being that you will not have ownership rights over the asset. An operating lease is also usually shorter than a finance lease.
Benefits to asset finance and leasing
- Cash flow- instantly ease your cash flow with a finance option.
- Alternative funding lines- with a finance option there is no need to use up an existing bank
- Access the latest equipment- through an affordable finance option, the most modern technologies will be made more cash flow efficient.
- Pay for your equipment as your use it- this way you are paying for your equipment as it brings value to your company. You wouldn’t pay your employees 5 years upfront so why pay for your equipment in advance?
- Tax benefits- by using a finance lease you pay you VAT in affordable amounts as opposed to upfront. Not to mention this way 100% of your rental is deductible against your company’s corporation tax.