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. Leasing allows you to enjoy the profit-generating benefits of having your own equipment without the headaches of asset depreciation. This is an ideal financing option for companies looking to increase liquidity and improve cash flow.

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, 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 is a business financing solution where the lessor leases an equipment to your business for 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 a equipment 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, leasing 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, leasing allows you to constantly equip your company with cutting edge equipment.

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