Equipment Leasing Singapore

The right equipment can increase your business productivity, improve efficiency and make a significant improvement to your bottom line. Apart from purchasing, there is another option of equipment leasing. Equipment Leasing allows you to enjoy the profit-generating benefits of having your own equipment without the headaches of asset depreciation. Equipment Leasing in Singapore is an ideal financing option for companies looking to increase liquidity and improve cash flow.

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What is Equipment Leasing?

Many companies in Singapore need access to expensive equipment in order for their businesses operations to run smoothly. However, purchasing equipment in Singapore can be a daunting, not to mention pricey affair. Other options include leasing the equipment you need or acquiring it through hire purchase-but what does that entail?

If you are looking for a long term and cost-effective solution for your business needs in Singapore, equipment leasing and hire purchase are some great alternatives to consider. While both provide you with long-term usage of essential equipment for your business, they have very different implications on your finances and needs.

An Equipment Leasing agreement in Singapore is a business financing solution where the lessor leases equipment to your business for a rental fee. At the end of the lease agreement period, you will have to return the equipment back to the lessor in its original condition. From the perspective of the lessor, the leasing out of equipment in Singapore generates revenue. For the lessee, your business enjoys access to the equipment to perform your day to day business operations, with various benefits such as improved liquidity, freed-up line of credit, and flexibility in upgrading. We further expound on the benefits of Equipment Leasing below.

Benefits of Equipment Leasing

1

Improve Liquidity

As a business owner, cash flow distribution is an important concern. To acquire equipment for your business needs, making a large sum purchase may not be the wisest option. With a low initial down payment, equipment leasing in Singapore is a more cost-effective option that allows you to acquire equipment. This frees up cash flow for other areas of priority such as business expansion.

2

Free Up Line of Credit

A benefit of equipment leasing is freeing up your lines of credit. From office automation to industrial machines, equipment is essential for many businesses. There are a number of financing arrangements that allow a business to acquire equipment, such as term loans. However, using a term loan to purchase equipment may take up a sizeable proportion of your loan and reduces your line of credit. Equipment leasing frees up your line of credit to obtain additional financing. In addition, equipment leasing uses the equipment itself as collateral. Therefore, any other collateral your business owns can be used to secure additional financing.

3

Flexibility to Upgrade

For some industries, businesses are at a big disadvantage if your equipment becomes obsolete. Apart from the technical competitive edge, equipment is also an extension of your brand and contributes to your customer brand perception. While it is impractical to purchase new equipment every year or two, equipment leasing allows you to constantly equip your company with cutting edge equipment.

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Financing Example

1 Hire purchase Singapore
Company A is an architecture company that deals with design development. Their existing PC and laptops specification can no longer meet most of the latest software requirement and struggle to handle heavy-duty graphic rendering – basically reaching the end of their useful life. They are looking at acquiring 50 brand new laptops for its employees in bid to improve their productivity as well as gaining the additional competitive edge.
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The price of forklift is $35,000, while the storage rackings would demand a hefty price of $0.5 million. In order to expand their warehouse without affecting their cash flow, they approached ETHOZ Capital for equipment financing advice in Singapore.

They were recommended to acquire their equipment through hire purchase over a period of 3 years. Full ownership of the equipment will be transferred to Company B upon completing payments at the end of the Hire Purchase agreement. The owner of Company B found the overall process of equipment financing very satisfying with easy application, fast approval and personalised service.

ETHOZ has offered Company B the following terms:
Interest Rate : 4% flat per annum
Monthly Repayment : $16,644.44 x 36 months
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In this example, Company B does not have to fork out $0.535 million straight up to expand its warehouse facilities. Instead, Company B only pays $16,644.44 per month through a Hire Purchase agreement and this helps them to generate revenue in tandem to the hire purchase payment.

* Disclaimer: Example above is merely shown for illustration purpose to better allow readers to understand the uses of each financing solution. Figures and interest rates listed above are not representative; it may differ based on each company’s requirements and management’s approval. Additional terms and conditions may also apply based on the credit assessment and evaluation conducted during application. ETHOZ Capital Ltd and its employees make no representation or warranty, whether expressed or implied, and accept no responsibility for the completeness or accuracy of the computation.

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