Finance Options
Term Loan
A term loan has a fixed repayment schedule over a set period. The borrower receives a lump sum upfront to purchase the asset (which often secures the loan) and repays it in installments with interest.
Key Features:
○ Fixed Term: Usually medium to long term, such as 3-7 years.
○ Repayment Schedule: Predetermined installments, either monthly or quarterly.
○ Ownership: The borrower owns the asset outright upon purchase.
○ Collateral Requirement: Secured against the asset being financed.
○ Tax Implications: Interest payments are typically tax-deductible.
○ Flexibility: Allows businesses to acquire assets without full upfront costs.
We will identify the right product based on your business needs taking into account the value add of your new equipment to your bottom line. Whether you’re seeking flexibility, ownership, or cash flow optimisation we can help you identify the best fit for your needs outside of your banking arrangements.
Finance Lease
A finance lease is a fixed term lease agreement where the lessee assumes most of the risks and rewards associated with ownership, even though the legal ownership remains with the lessor (financier).
Key Features:
○ Ownership-like Control: The lessee (client) has full control over the asset for most of its useful life.
○ Balance Sheet Liability: Recognised as both an asset and a liability on the lessee’s balance sheet.
○ End-of-Term Options: Often includes a purchase option at the end of the lease.
○ Fixed Payments: Predictable costs with scheduled payments.
○ Tax Benefits: Depreciation and interest payments may be tax-deductible in some cases.
Operating Lease
An operating lease is an agreement where the client (or lessee) uses the asset for a set period without ownership at the end of the lease term. The leasing company (or lessor) retains ownership of the asset during the term of the lease.
Key Features:
○ No Ownership: Lessee returns the asset to the lessor at the end of the term.
○ Off-Balance Sheet: May not appear on the lessee’s balance sheet under certain accounting standards.
○ Maintenance: Maintenance and servicing are usually handled by the original equipment supplier.
○ Flexibility: Upgrades during or at the end of the lease term are usually available.
○ End of term support: Asset management at end of term including carbon offset.