While sourcing cheap business loans are critical to business asset acquisitions, businesses also have many other factors to assess when considering a major purchase. One major consideration for businesses is deciding when is the ideal timing to purchase new assets – finance for equipment, truck financing for businesses, and other vehicle loans.
Are economic conditions suited to business investment? What’s happening with lending rates? What tax and other measures can be realised? Are just some of the questions that business owners may be asking. Investment in business equipment and other assets can be made in order to increase productivity, expand output, open new markets and generally improve profitability. In purchasing assets, businesses will typically have an expectation of the ROI they will achieve. So considering a range of factors is required.
While business owners may usually have a good handle on their business prospects, the added complication at the moment is COVID-19. The pandemic has had an impact on the economy and the effects of the vaccine roll-out both in Australia and overseas on the economy are also in the mix.
Our team at Business Finance are not only experts in sourcing cheap commercial loans, but we stay across movements and indicators in the wider economy. In this news article, we’re covering off a range of economic matters which may make now an ideal time to invest in business equipment.
Latest Economic Figures
In releasing the December quarter economic stats and GDP figures, Treasurer Josh Frydenberg said the figures were much better than the Government had expected. The figures revealed economic growth of 3.1% which was above the expectation of around 2.5%. The country has now posted two consecutive quarters of economic growth above the 3% figure which was considered by many as extremely surprising and very encouraging, especially against the coronavirus backdrop.
Unemployment is another key indicator and the employment figures continue to surprise also. The February figures showed a further drop in unemployment but there is still a large number of under-employed. The big check for the employment scenario is likely to come following the expiration of the JobKeeper package at the end of March. Read more here.
Government Support Measures
The Federal Government along with state and territory governments implemented a large number of programs, measures, and initiatives to support businesses and stimulate the economy in response to the coronavirus pandemic.
Many received massive fanfare when introduced but may have drifted outside your consciousness as the months rolled on and you had plenty else to work on. Several of the measures relevant to asset acquisition are still in play and worth revisiting if you are planning a major purchase.
Instant Asset Write-Off is still available to eligible businesses for the purchase of eligible assets, as is temporary full expensing, another accelerated asset depreciation measure. The latter is somewhat of an expansion and extension of IAWO as it includes larger businesses. More info.
Accelerated depreciation measures allow for the full purchase price of the asset to be depreciated in the current financial year rather than depreciated over many years at a set percentage per annum. All of course within the ATO guidelines. For eligible businesses, that should include many items of business equipment, business cars, vehicles, and trucks.
With the end of the financial year approaching, now could be the ideal time to purchase assets if you’re looking to realise the depreciation in this financial year. Business Finance can source you cheap business finance for a range of finance for business cars, equipment, trucks, and business car loans.
In order to realise accelerated depreciation measures, businesses need to finance the equipment/asset under the appropriate type of loan. While Business Finance sources the full range of commercial finance facilities, Chattel Mortgage is the most suitable for these measures. Also known simply as Equipment Loan by some lenders, with this loan facility the asset is posted to the accounts of the borrowing business and as such can be depreciated.
You can review the full details of Chattel Mortgage/Equipment Loan on our web pages, use our calculators to generate Chattel Mortgage repayment estimates for the items you plan to purchase, and contact us to source a quote for your loan. Use our online business loan calculator.
For those that operate in construction, earthmoving, civil works, and allied sectors, the sign that the time is ideal to invest in equipment could come from the current boom in infrastructure across the country. Governments at all levels have been using infrastructure spending as a major lever to stimulate their economies.
Major projects are underway in many areas and this may represent business opportunities for your business. Information on government tenders to bid for contracts is available on state government websites and details of upcoming projects can be sourced through a range of channels. More info.
Business Loan Interest Rates
We’ve kept the best sign till last with our update on interest rates on commercial loans. Nothing says the time is ideal for investing in business equipment better than low-interest rates. Business loan interest rates are at historic low levels and Business Finance can achieve extremely cheap finance across the portfolio of loan products for many business requirements.
Recently there were comments and opinions from some economic observers/reporters that they expected the RBA would need to increase the official rate in response to the heating home price market. But the RBA Governor, Dr. Philip Lowe quickly quashed such comments saying he was not intending to raise rates until key economic indicators were above current levels. Read more.
So cheap interest rates are on the table, along with taxation measures and positive economic signs. If you’re planning to spend on equipment, contact us for an obligation–free business loan quote to consider.
Phone 1300 000 033 to discuss your requirements.
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