The construction industry is one of Australia’s largest at the moment, meaning there’s plenty of opportunity for SMEs to make their mark. Operating a construction business doesn’t come cheap though, and requires specialist equipment and materials that you might not have the capital to purchase yourself.
How do you get around this issue? One convenient way of doing so is going through private lenders, who can offer assets to your business on tailored payment plans. Read on to discover why construction companies around Australia are choosing equipment finance, and what’s available to you as a business owner.
Why not get a bank loan?
It’s true that traditional bank loans are available for construction companies, but one major drawback is that these require collateral. If, understandably, you’re not comfortable putting your assets (such as your home!) up as collateral, then private lenders may well be a more appealing choice.
Equipment finance options
Every situation is different, and there are plenty of equipment finance options that private lenders can offer in Australia. Here are just some of the most common options available to you:
Operating lease
This transaction won’t be recorded on your balance sheet, so you can enjoy the benefits of using your equipment without worrying about ownership. (Essentially, this is a rental.)
Finance lease
This agreement covers an asset for most of its working life. The lessee bears the responsibility for ownership in this case, and the value of goods is shown on your balance sheet, minus depreciation.
Revolving credit line
Simple and convenient, revolving credit can be re-negotiated at any time, and is commonly available over 6-12 months with no need for submitting multiple applications.
Commercial hire purchase
Like an operating lease, the lessor has ownership of the equipment, but the borrower has the option to purchase the asset/s with an additional payment at the end of the term. The asset/s will appear on your balance sheet, minus depreciation.
Chattel mortgage
This is similar to a hire purchase, but with specific GST benefits. It can be structured in a similar way to a finance lease or commercial hire purchase, where you can own the equipment, but only sell it if you’ve paid out the full balance.
What equipment can you finance?
There’s plenty of costly, specialised equipment that may be required for a construction project, but with fluctuations in your cash flow, you might not always have the capital to purchase this equipment while still keeping your business profitable. Here is just some of the equipment that can commonly be financed:
Earth moving equipment
Trucks and passenger vehicles
Forklifts and material handling vehicles
And much more!
Find out how we can help your business
If you’re in the market for construction business loans in Australia, then GCC is the smart choice. All the different options can be overwhelming, though, so speak to our friendly, professional team today to discuss your individual needs and we’ll be happy to deliver a tailored solution. Contact us (link), and get the ball rolling.
