What is an equipment lease?
Equipment leasing is a form of finance that allows a business to acquire hard or soft assets without the upfront costs associated with large purchases. For example, a business may need to add or replace equipment, buy a vehicle or refit their premises, enabling them to expand or keep up with the market. A lender purchases the item, the business then leases it back through fixed monthly payments over an agreed period.
Typically, asset finance is provided for high value ‘hard’ assets such as machinery, equipment or vehicles, but Portman can also arrange asset finance for ‘soft’ assets such as IT, fitness, catering or vending equipment, as well as premises fit-outs, furniture or even air-conditioning.
How equipment leasing works
When a business is looking for new assets, they identify what is required and who they would like to buy it from. They then contact Portman to discuss their finance options who then find the deals that best suit the business need. Monthly repayments and terms are agreed and a financial agreement is formally accepted. As both a lender and a broker, either Portman or one of our panel of lenders will buy the item, which will be delivered to you. Fixed repayments are then made until the end of the term.
What happens at the end of the lease period?
As the asset was originally purchased by a lender, during the repayment schedule the item remains the property of that lender. Lease agreements are typically on a minimum term or fixed term lease. A fixed term lease automatically ends, whereas a minimum term lease continues after the initial term, allowing the customer to continue renting the equipment, hand the item back to the lender, or usually arrange for the purchase of the asset outright for a fee.
How much do equipment leases cost?
The interest rates available to each business can be very different because individual circumstances, credit history, business performance and the type of asset being purchased all affect the rate. Being both a lender and a broker, Portman can explore the market on your behalf and approach multiple providers. We then find a single deal or combination of deals which best suit your requirements. Businesses with strong credit ratings can achieve annual flat rates of 5% for asset finance.
Why would I use finance?
- Buy what you need now
- Invest in new machinery, equipment and vehicles
- Preserve existing credit lines
- Spread your costs with fixed monthly payments
- Potential tax advantages
- Avoid price inflation
- Preserve cashflow for operational cost and contingency
- Enable business growth
- Secure fixed competitive rates
- Protect your personal wealth
With a hire purchase agreement, the borrower typically pays the VAT and a deposit upfront. With lease finance there is usually no deposit, and the VAT is spread across each payment.
The tax treatment is different between hire purchase and finance lease. We recommend taking professional tax advice to determine which is best for your business.
With hire purchase, the borrower has a guaranteed right to buy the title of the asset, which will normally be for a nominal administration fee. At the end of a lease finance agreement, the borrower can give the assets back or continue leasing. However, purchase of the asset on a finance lease can usually be arranged for a fee.
Excellent communication and help throughout the process. Easy and prompt emails. Highly…Daniel Cooper
Portman and the entire team are great to work with, know their lenders and products incredibly…Marney Howe
Very smooth operation
I have now dealt few times with Portman Finance and it has always been very smooth and…Anthony ienco
We used Portman Finance to secure finance for a new restaurant we are opening. Jack Weston…David B