Equipment Financing

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What it means
What is Equipment Financing?

Equipment financing is a method of loaning used by businesses to purchase Operating Equipment. These equipments are then served as Collateral to the lender. Typically, in best interests of the lender, the amount financed cannot exceed the collateral value.

What is the Process like?

The process is simple. E.g. You apply to a bank/lender for financing of your Fixed Equipment. The bank/lender will issue a loan (LTV ranging: 80% - 100%) to you for the financing of your Fixed Equipment. You are then liable to pay the bank monthly annuities in partial portions of your principal, along with the interests charged. In the case of failure to pay, the bank has a claim on your Fixed Equipment.

How does Equipment Financing benefit me?

Typical Advantages of Equipment Financing:

  • In contrast to traditional lenders, you may be able to arrange 100% financing of your equipment with no down payment. This is a key advantage to you if cash flow is a concern to your business.
  • Equipment financing is a source of funding that lets you hold onto your cash, or working capital, so it can be used for other areas of your business, such as expansion, improvements, marketing or C10&D.
  • Equipment Financing often enables you to acquire better and more advanced equipment than you could have without financing. Certain Equipment Financing terms can also allow for technology upgrades or replacements within the term of the contract.

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About Equipment Financing

What is Equipment Financing?
Equipment Financing is a form of short term borrowing which is extended by the bank or a lender to clients based on unpaid invoices.
Who is Equipment Financing suitable for?
Lenders / Factoring Companies are typically willing to finance your company if you are a growing business with moderate sales, or a larger business with strong sales and a plenty of opportunities.
Why do Businesses use Equipment Financing?
Companies often engage Equipment Financing to meet Short Term Liquidity needs. Higher liquidty allows companies to grow and run business operations efficiently.
How do I qualify for Equipment Financing?
Ideally, you'd meet the basic criteria if you sell goods or services on normal credit terms to various creditworthy businesses or government agencies, and your invoices are for fully delivered goods or fully provided services. The age of your business, its trading results and your asset position are less important when it comes to facility approval. Business Loan lenders are generally more interested in the Creditability of your customers (Debtors).
How much will you advance to Invoice Sellers? How do you determine that value?
Depending on the Credit Analysis on your company, the Lenders determine a LTV & Interest Rate that matches the best interests of both parties.

What Are The Benefits Of
Equipment Financing In Singapore?

In many industries in Singapore such as engineering and construction, it is hard for companies to operate without equipment like computers, trucks and heavy machinery. It doesn't matter if you are a product or service company. For your business to operate successfully in this country, you need to use the right equipment. In the long run, equipment may need maintenance or replacement which can take a toll on your business cash flow. That is where equipment financing comes in. If your business has limited funds to replace or maintain equipment, you can use equipment financing for that purpose.

What is equipment financing?

Equipment financing refers to a form of financing which is taken by businesses to purchase certain types of equipment. Lenders in Singapore use the equipment as security for loans they extend to businesses. That means if a business defaults on a loan granted to them, the equipment will be seized. However, if the loan is repaid on time, you will have access and continue to use the equipment. Equipment financing is commonly used by businesses in Singapore because it helps improve working capital and business cash flow. If you are a business looking for a convenient and fast way to finance equipment purchase then look no further than equipment financing.

Benefits of equipment financing

Before you take this form of financing, you need to ask yourself what are the benefits of equipment financing in Singapore? The benefits of equipment financing in Singapore are well documented. Whether you are a startup or an established company, choosing equipment financing as a source of financing to purchase the necessary equipment for your business makes perfect sense. With this type of financing, you will hold onto cash or working capital which are necessary for ongoing expenses such as payroll and rent, including marketing, improvements, and expansion of your business.

Compared to traditional lenders, equipment financing allows businesses to get 100 percent financing of their equipment that comes with no down payment. This is very important for businesses that care about their cash flow. Another benefit of equipment financing is that it allows businesses in Singapore to acquire highly advanced equipment, which could not be possible without financing. In addition, there are certain types of equipment financing which allow for technology replacement or upgrades within the contract period. Equipment financing is a cheaper option than paying cash outright to purchase equipment.

The problem with buying equipment with cash is that it drains the liquidity of a business. However, equipment financing is cheaper because the payment terms can be spread over a set period of time. Also, equipment financing can improve the cash flow of your business as regular repayment of the loan can make your cash flow look healthy. This helps businesses maintain liquidity rather than having their money tied up in assets. Unlike most business term loans, the interest rate for equipment financing is lower. Equipment financing can also help businesses avoid the uncertainty of investing in equipment that your business until it improves efficiency, achieves the right return, and saves costs.

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  • How Long Does It take for a Loan To be approved?
  • Depending on the application the loan approval process will take between 3 to 10 working days
  • What is the interest rate that I can expect?
  • For the Micro Loan scheme, you can expect an interest rate from 3.7% flat per annum. You can pay off the loan at any point of time and the interest will be pro-rated
  • How do I know which loan I Quaify for?
  • If you are a Singapore incorporated company, you can potentially qualify for business financing, no matter how long your company has been incorporated. To know your options simply enquire here or call us.
  • Which lenders do you work with?
  • We work with all local and foreign banks in Singapore, Private Financiers and other lenders.
  • How do I get started with an application?
  • Simply enquire here, or drop us a call.