How it Works: A chattel mortgage is a type of secured loan where the business takes ownership of the equipment from the beginning. The lender provides funds, and the asset serves as collateral. The business repays the loan over an agreed-upon term.

Advantage: The business owns the equipment from the start and can claim tax benefits. You can claim the Goods and Services Tax (GST) included in the vehicle’s purchase price as an input tax credit on your Business Activity Statement (BAS). Additionally, you may also be able to deduct the interest charges on the loan and depreciation expenses up to the Depreciation Limit as tax deductions, subject to the advice of your tax professional.

Consideration: Failure to repay the loan could result in the lender repossessing the equipment

How it Works: In a finance lease, the lender purchases the equipment and leases it to you. You make regular lease payments over a set term, and at the end of the lease, you have to buy the equipment at a predetermined price (which is the residual value amount).

Advantage: If you prefer lower monthly payments during the lease term, the residual value brings down those instalments.

Consideration: The business doesn’t own the equipment during the lease term.

A “low doc” loan, short for “low documentation” loan, is a type of loan designed for businesses that may have difficulty providing the extensive documentation typically required for traditional loan applications.

Advantages: The primary feature of a low-doc loan is that it requires less documentation compared to standard loans. This is particularly useful for self-employed individuals, small business owners, freelancers, or those with irregular income streams who may not have all the standard income verification documents that traditional lenders usually request.

Consideration: Your credit history and the length of time you have been operating your business will be used to assess your eligibility. You may also be required to supply bank statements or a letter from your accountant to support your application. Low Doc Car Loans must be secured.

When considering which type of loan to choose, it’s important to assess your business’s financial situation, the expected usage of the equipment, your cash flow, and your long-term goals. Each type of loan has its advantages and considerations, so it’s recommended to consult with your accountant who can guide you toward the best option for your specific needs.

How It Works: An operating lease is similar to a finance lease, but at the end of the lease term, you typically have the option to return the equipment, renew the lease, or buy the equipment at its current market value. This option is ideal if you’re looking for short-term equipment usage or if you want to regularly upgrade to newer models.

In a CHP, the lender purchases the equipment on behalf of the business and then leases it back to the business. The business makes regular payments, typically over a fixed term, until the total cost (including interest) is covered. Once the loan is repaid, the business gains full ownership of the equipment.

Advantage: The business gains ownership of the equipment at the end of the loan term. Businesses using the Cash accounting & Accrual method of accounting can claim the GST paid on the purchase price of the asset & interest up-front when they lodge their next Business Activity Statement (BAS).

Consideration: The business is responsible for maintenance and other ownership costs from the beginning.

How It Works: A line of credit provides you with a revolving credit limit that you can draw from as needed. This can be beneficial if you have ongoing equipment needs or if you want the flexibility to borrow smaller amounts for various equipment purchases.

Cash flow loans are a type of short-term business financing designed to address cash flow gaps or immediate funding needs. These loans focus on the regular inflow and outflow of cash within a business, helping to maintain day-to-day operations, cover operational expenses, seize growth opportunities, or bridge gaps between incoming revenue and outgoing expenses. The size of the loan is determined by the turnover in the business over the past 6 months on average.

Key features of cash flow loans:

Short-term Focus: Cash flow loans are short-term financing solutions, designed for businesses experiencing temporary cash shortages due to factors like outstanding invoices or peak business cycles, and are typically repaid in less than a year.

Based on Cash Flow: Unlike traditional loans, cash flow loans emphasise and rely on the business’s cash flow history and projected future cash flows. 

Flexible Usage: Cash flow loans can be used for various purposes, including operating expenses, managing seasonal fluctuations, financing inventory, seizing opportunities, or addressing unexpected expenses.

Collateral and Personal Guarantees: While cash flow loans are generally unsecured, lenders may still require a personal guarantee from the business owner or a lien on business assets as security.

Interest Rates: Interest rates for cash flow loans can be higher than those for traditional loans due to the short-term nature and sometimes reduced credit requirements.

These custom-tailored financial solutions are designed to assist entrepreneurs with poor credit scores in obtaining the necessary funds to foster growth and success. Whether you’re aiming to scale your operations, acquire new equipment, or cover unforeseen expenses, bad credit commercial loans serve as a crucial support system for those who have encountered financial setbacks. Featuring adaptable terms, these loans empower you to seize opportunities, all while working towards both your entrepreneurial aspirations and credit rehabilitation.