Monday 14th August 2023
Funding your Fusion
Capital is key to the success of any business be it startup or established so let’s look at ways to finance your laser without breaking the bank.
Finance leasing enables the business to acquire assets without needing to buy the asset outright.
Benefits of Leasing:
- You will retain capital within your business.
- Finance Leases offer flexibility in terms of length of agreement and repayments. Typically, over a 3-5 year term.
- The repayment profile gives you confidence in being able to plan and budget for the lifetime of the asset.
- Tax advantages pending on status.
- Using the latest equipment will ensure that your business remains competitive.
- The agreement is secured against the asset and therefore owned by the leasing organisation.
- Non-payment could negatively affect the credit rating of the business and the guarantor
Hire purchase is a form of finance that can be used to buy new or used equipment. You essentially hire the asset over the contract period and once the facility has been paid off, you are the legal owner of the asset.
Benefits of Hire Purchase:
- Rather than one large sum, you can spread the cost over a 3 to 5 year period.
- Makes larger assets more affordable to the business.
- Flexibility, you can choose a fixed term and deposit that suits you.
- As the hire purchaser, you’ll own the asset after paying the last instalment.
- There are usually no tax charges on Hire Purchase agreements.
- Hire Purchase can be paid off early, depending on the customer.
- Asset depreciation.
- Non-payment could negatively affect the credit rating of the business and the guarantor and could result in the asset being re-possessed.
The Recovery Loan Scheme supports small and medium sized businesses to access the finance they need to grow and invest. Finance can be used for any legitimate business purpose, including working capital or investment. The actual amount and terms offered are at the discretion of participating lenders but under the scheme the government guarantees 70% of the finance to the lender.
As of the 1st of April 2023 the government has permanently increased the Annual Investment Allowance (AIA) to £1m for qualifying expenditure on plant and machinery.
The government has also introduced a new tax incentive called ‘Full Expensing’. This allows businesses to fully deduct the cost of investing in new plant and machinery from their taxable profits in the year of purchase. This means that businesses can reduce their tax liability by the full cost of qualifying investments, rather than having to spread the cost over several years through capital allowances. The policy is designed to encourage businesses to invest in new equipment and machinery, thereby boosting productivity and economic growth.