Key Facts About Equipment Leasing - UK

Here is our 60 second key facts guide to UK equipment leasing.

• Unlike other forms of commercial finance applying for equipment leasing finance is a very simple process. All that's needed is a short one page leasing proposal form and the equipment quote(s) for the initial application. Supporting information to complete the application should already be available such as bank statements and accounts etc.
• Timescales from application to loan completion are fast, typically around 2 weeks!
• The lower cash outlay normally needed for an equipment finance facility means that you can buy more or higher specification equipment in comparison to outright purchase!
• Monthly payments (rentals) are fixed for the term of the lease which means all future costs are known.
• By leasing cash can be retained within the business thereby preserving working capital for use elsewhere within the company.
• Where sufficient cash is not available to purchase equipment, leasing gives access to plant & machinery that otherwise might not be available.
• UK rules mean that 100% of monthly rentals can be offset against tax, this can make leasing cheaper than outright purchase or other commercial loans.
• Where the latest technology is a must to remain competitive, leasing provides a sustainable upgrade path at agreed intervals.
• Finally, equipment already owned can be used to raise working capital via leasing sale and leaseback finance facilities.

More Commercial Finance News

One of the main unsecured Payroll Finance Lenders in the UK temporarily stepped out of the market place last week leaving just one active lender. This payroll lender currently expects to return once new funds have been raised, maybe in a couple of months.

UK Businesses in their quest to raise working capital are increasingly turning to equipment leasing and more specifically selling and leasing back existing assets. This financing method is typically a much easier way to generate cash for a company and expect requests for leasing to increase in popularity over the coming months. Of course all the main benefits of leasing such as the tax advantages are the same whether equipment is new or re-financed!

Commercial Loan - update

Finance offerings in the commercial loan market place continues to change weekly.

Just recently we have been informed of changes to either prices or criteria in the following commercial areas:-

Price increases in the cost of equipment leasing from a number of lenders.

In the short term leasehold business sector one of the main lenders has pulled out of the market.

A major bridging loan lender has announced slight price reductions accompanied by a large reduction in what they will lend against property values.

It goes without saying that virtually all high geared property development loan lenders have either greatly tightened their lending criteria or are sitting on their hands!

Commercial deals can still be placed but overall the quality of any business finance proposal submitted by either brokers or borrowers needs to be much higher than previously required.

Why Do Businesses Choose to Lease Equipment rather than Buy?

When seeking any type of commercial finance, there are few areas of business funding that offer 100% finance availability. One area where 100% finance is available is asset based finance for equipment such as plant & machinery, computer hardware etc. In fact it is possible to lease any kind of equipment or asset, in many cases without any deposit, advanced rentals or extra security.

Many people in business think that leasing is for companies short of cash, in some instances that may be the case, but a little research shows that even the biggest companies use leasing to access assets essential to the running of their business.

One reason this finance option is a regular choice is the relative ease with which a leasing arrangement can be set up along with flexible payment terms, plus, other financial tools will still be available to the company. However the main factor in deciding to lease is cost, for most businesses the overall cost of leasing any particular asset or piece of equipment is lower than a cash purchase once loss of interest on cash on deposit and tax rules and deferred VAT payments are taken into account. It should be noted here that this rule may not hold for all businesses for example, start up companies or where poor credit history applies. Whatever individual circumstances apply, your accountant can offer professional tailored advice on any likely savings.

Unlike other finance options leasing offers fixed payments for the term of any agreement therefore easing cash flow management by not reducing working capital available to the company. Other major benefits of leasing is the possibility of upgrading or keeping technology up to date if the right finance option is taken out, adding new equipment to any arrangement is also very easy, especially once a payment record has been established. If you do not take ownership of the leased asset at the end of the term then the lender will have responsibility for it's disposal.

Finally, by opting to lease, funds can be retained within the company to aid growth, but also the opportunity to acquire access to more or higher specification equipment can add significantly to that growth.

I recommend you visit our Business Equipment Leasing page for more information on the topic of leasing.

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