No matter what type of manufacturing business you run, equipment is likely one of your primary funding concerns. When the time arrives to upgrade machinery or upscale your operation, things can get costly pretty fast, but the good news is, there’s help out there if you know where to look.
Combined with cost-effective equipment finance, the government offer grants for buying manufacturing equipment, and the ATO is also chipping in. Let’s take a look at three tips on financing equipment when you run a manufacturing business that will save you some time, research, and money.
Tip 1: Explore all the available equipment finance options
During the constant hustle, bustle and demand of doing business day to day, many enterprises neglect to research the full range of equipment finance options open to them – but the cost of doing that can be high.
It’s essential to consider several factors beyond interest rates and asset finance structures when you’re planning an equipment purchase. For instance, tax and GST implications can produce savings of tens of thousands of dollars over the average asset finance term. Bill Tsouvalas is CEO of business finance brokers, Savvy, and he says the key to successful business finance is scanning the marketplace. “These days, the time demands on business owners and CFOs are the same as they always were, but the fact is, it’s never been easier or quicker to explore all your equipment finance options.
Brokers like Savvy provide an end-to-end service. We can match the specific needs of your business with a comprehensive range of loan and lease options. We do that by partnering with an extensive, diverse panel of lenders, and we only consider the most relevant, effective solutions. Then, we liaise with the chosen finance provider for you until the equipment arrives at your factory or facility. The idea is you can get on with running your business, but you still get the best deal possible.”
Tip 2: The ATO temporary full expensing asset incentive
In the wake of COVID-19, the Australian government and the ATO put several measures in place. The aim was to help businesses get through the worst of the efforts to stop the spread of the virus and encourage growth as the country returned to something more like normal. Initially, the instant asset write-off scheme helped many businesses cope with some of the disruptions, and now, a new measure has been put in place, running until mid-2022.
Temporary full expensing applies to all Australian businesses with turnover under $5 billion. Where assets and equipment get purchased between October 6th 2020, and June 30th 2022 and used solely for manufacturing, you can deduct the entire cost when you file your next tax return.
If you’re looking to buy second-hand manufacturing equipment, the incentive applies to both new and used assets. It’s worth remembering that if you purchase vehicles and plan to use the scheme, you can only apply the deduction to the business portion of use.
Tip 3: Grants available to Aussie manufacturing businesses
Elsewhere, the Australian government is doing a lot to help regional or rural businesses, startups, and manufacturing companies buy equipment. There are hundreds of grants open for application at any one time. Eligibility will depend on factors like your location, turnover, and the nature of the work you undertake.
The Entrepreneurs Programme is designed to assist some businesses with transitioning to more energy-efficient systems and machines, but it also looks to fund enterprises in many key areas within the manufacturing sector. You can use the resource to obtain funding for almost anything, from scaling up your workforce to buying or upgrading vehicles and purchasing equipment.