Business loan for equipment imported
If you’re searching for a business loan for equipment imported from China, USA, Germany or elsewhere into the UK, consider the following before opting for the import finance solution that fits your particular business circumstances.
- Is the equipment for own business use or re-sale?
- Is a deposit required with order prior to delivery?
- Business loan Vs Asset finance, which is better for my business circumstances & needs?
- What’s the overall cost of the import including shipping, VAT & duty?
If you import equipment or machinery into the UK and think you might require finance support now, or in the future, continue reading.
We’ll cover everything you need to know about a business loan for equipment imported below…….
Business loan for equipment imported – Own use or re-selling?
If your Business acts as a UK wholesaler, re-seller or distributor of equipment or machinery, then it’s unlikely you’ll hold the imported item(s) in stock for longer than 1-6 months.
That time held in stock is critical.
If 120 days or less before a sale consider a revolving credit facility rather than a loan as there are no fixed monthly repayments, the finance is repaid at the end of this period and you only apply once to use the finance over & over again.
If greater than 120 days before the imported item(s) are sold then a short term business loan for equipment imported is the better solution.
Once sold you can utilise invoice finance to repay either type of import finance mentioned above, improve cash flow and importantly for any import trading business provide a further 90 days of cheap finance facility.
Demonstrating a full understanding of your customer needs and the supply chain, you could also consider a relationship with a Firm like ours to arrange the asset finance for your customer at the time of your sale and prior to customer delivery.
We would handle the entire process from assessing the correct finance solution for their needs, to Applications to finance implementation.
Use any of the forms on this page to contact us if that’s of interest to you as a means of improving sales conversion.
Own Business use:
When importing the equipment or machinery for use within your own Business then the key business consideration is: “how long do you need the finance for“?
If the finance is needed to pay fully for the equipment delivered into the UK but then you intend to re-finance using asset finance or repay the import finance out of own working capital then consider a revolving credit facility for short term business loan.
However, if the finance is required to import the equipment and then fund that acquisition over a 2-5 year period then either a business loan for equipment imported or asset finance is the correct solution.
Business loan for equipment imported Vs Asset finance
The key issue is that you cannot obtain asset finance for imported equipment or machinery until it’s delivered into the UK.
The security for the finance is the equipment asset you’re buying but until it’s delivered in the UK the Asset finance company cannot purchase it which then enables them to hire or lease it back to you.
A solution we often recommend is a form of Bridging finance which when used concurrently with an asset finance provider works perfectly to solve this import supply chain challenge.
The alternative solution is a business loan for equipment imported as the security for the finance is the strength of your business not the equipment being imported.
Assuming your Business is established, profitable and with a positive balance sheet then arranging a long term business loan will not be an issue and will be cheaper than asset finance. Typically 2-4% less interest per annum.
Younger less well established small to medium businesses will struggle to secure a loan which is why the asset finance industry exists and continues to grow in the UK.
Business loan for equipment imported – Shipping, HMRC VAT & Duty
You may have the funds to purchase the imported equipment without finance but don’t forget the following will need paying before you can take delivery:
These short term costs, especially 20% VAT, are often overlooked and cause avoidable cash flow problems before the new equipment starts contributing to revenue.
A 3 month short term business loan for equipment imported is the ideal solution to cover these costs.
We hope you have found this review of business loan for equipment imported useful.
If you think it would be a solution for your Business now, or in the future, please contact us using the forms on this page to arrange an informal, no obligation, discussion regarding your Business, ambitions, the proposed trade and your unique circumstances.
We’d love to hear from you.