FINANCE FEATURE Heavy equipment finance demystified

by Dave Cummings, Head of Asset Finance, Swoop

Heavy equipment finance

Benefits of heavy equipment finance

1. Lower tax costs

By opting for heavy equipment finance, businesses can reduce their tax burden. Financing loans allow the equipment to appear as an asset on the balance sheet, enabling depreciation over time and claiming interest and fees as deductible expenses. Finance leases often allow the entire monthly payment to be claimed against tax as a business expense, providing additional tax advantages.

2. Lower risk for construction businesses

Construction businesses often face seasonal volatility, making heavy equipment purchases risky. Heavy equipment finance allows these businesses to spread the cost over time, preserving capital and mitigating uncertainties caused by seasonal variations. Lease payments

In the competitive world of heavy equipment, businesses face a crucial decision when it comes to acquiring the necessary machinery: heavy equipment finance or heavy equipment lease? Each presents its own considerations. To make an informed choice that aligns with your business’s unique circumstances, it’s essential to understand the benefits of both financing and leasing. Before delving into the advantages of heavy equipment finance, let’s clarify the distinction between the two options.

With heavy equipment finance, businesses obtain a loan to purchase the equipment. The advantages include building equity, ownership of the asset at the end of the contract, depreciation benefits, no limitations on equipment usage and the ability to use the equipment as collateral for future loans. However, higher monthly payments and potential challenges in disposing of the equipment at the end of its lifecycle are aspects to consider.

Heavy equipment lease:

On the other hand, heavy equipment lease involves a long-term rental arrangement. Businesses pay for the use of the equipment without building equity. Advantages include lower upfront payments, usually lower monthly payments compared to finance loans, potential maintenance and insurance responsibilities on the lender’s side and the option to return the equipment at the end of the lease or exercise a purchase option. However, limitations on usage and wear and tear, as well as the absence of equitybuilding are factors to be aware of.

can be aligned with the equipment’s productivity, providing further risk management.

3. Access to capital

Many businesses, especially smaller organisations, lack the necessary capital to invest in expensive heavy machinery. Heavy equipment finance bridges this gap, providing access to crucial capital that may be challenging to acquire from investors or shareholders.

4.

Financing used heavy equipment

The market for used heavy equipment is thriving, and businesses can secure financing for both new and used machinery. Expert equipment finance brokers such as Swoop, have access to funds for purchasing or leasing major pieces of plant and machinery, opening up opportunities for businesses to obtain the equipment they need.

Choice of finance partners

When it comes to heavy equipment finance, working with a knowledgeable and experienced broker can be a gamechanger. Swoop is a reputable broker with a specialisation in heavy equipment finance, possessing deep market knowledge and expertise. By partnering with Swoop, businesses benefit from its fast and efficient service, valuable lender relationships, access to additional lending options and comprehensive support throughout the funding journey. This means businesses can navigate the heavy equipment finance landscape with ease, ensuring a seamless and successful funding experience.

As the head of asset finance at Swoop, I’ve witnessed first-hand how securing the right finance is a game changer for businesses, especially when it comes to heavy equipment. From helping them unleash their growth potential to providing access to vital capital, it’s a thrilling journey filled with opportunities. At Swoop, we’re committed to making the process fast, efficient, and tailored to each business’s unique needs.

When it comes to heavy equipment acquisition, making the right financing choice is crucial for business growth. And with the FLA announcing a 12% increase in asset finance year on year*, now is a great time to explore the best options. With heavy equipment finance, businesses can enjoy lower tax costs, manage risk effectively, access vital capital and finance used equipment. Partnering with a reputable broker like Swoop streamlines the process, providing businesses with the deep industry knowledge, lender relationships and fast service necessary for a successful funding experience.

*www.fla.org.uk/research/ asset-finance https://swoopfunding.com