Hire Purchase
If a business wishes to buy equipment outright, Hire Purchase can provide a tailored and cost-effective alternative to loan or overdraft funding.
Hire Purchase enables your business to benefit from using the equipment straight away, but the payments can be spread over the life of the equipment. At the end of the term, ownership of the equipment is normally obtained for a nominal fee.
- Financing for up to 100% of purchase price
- VAT payment can be deferred to match cash flow of VAT reclaim
- Payment structure agreed at outset can be designed to match cash flow if required I.E seasonal payments for agricultural businesses
- Final lump (balloon) payment can help reduce regular payments where it is deemed beneficial
- Equipment is then purchased for nominal fee at end of the term (option to purchase fee, typically £100)
Finance Lease
A flexible, tax-efficient way for your business to acquire the equipment it needs without using up valuable cash reserves. You may also realise almost all the equipment value at the end of the term.
- Financing for up to 100% of purchase price
- Options to either continue renting equipment after the primary period, normally at reduced or nominal sum or, if permitted in the contract, sell the equipment and retain a proportion of the cash proceeds when the lease term ends (typically 97.5%)
- VAT is payable on rentals so it is not necessary to pay VAT on equipment cost up front
- Depending on asset type and term, it may be able to offset rental payments against profits and reduce tax liability
- Payment structure agreed at outset can be designed to match cash flow if required
- Final lump (or balloon) payment can help reduce regular payments where deemed beneficial
Sale and lease back
A simple form of refinance, this is a facility which delivers a method of releasing equity in unencumbered assets or assets nearing the end of their original finance arrangements.
The result is a cash injection into your working capital (after paying off any outstanding finance from other finance companies) to be used as required.
The nature of the new agreement will be the same as the Finance Lease or Hire Purchase product in terms of structure and tax allowances, depending on the option applied.
