When out to acquire machinery or equipment for your business, there is no doubt that you will want to learn financing options available. There are several options a business owner can utilize to acquire equipment that they require for the business, but they do not come with similar benefits. It is thus vital to understand any financing option and learn the effects it will have on your business in the long run.

Different financing options for businesses

Cash payments

When looking to purchase any equipment, you might be tempted to purchase it outright. One of the benefits of cash purchases is that you automatically become the owner after purchasing the equipment. The major downside is that cash payments might have a big impact on your finances. Paying a big lumpsum amount for a piece of equipment might mean you use a big percentage of the capital on only one asset.


Some businesses go for leasing as an alternative to purchasing equipment. Leasing allows you to acquire assets without purchasing them. You only pay installments to the owner of the asset during the period when you are using the asset. At the end of the leasing agreement, you return the assets to the owner. The major downside of leasing is that you do not own the assets at any given point.

Term loans

Some business owners turn to loans when they intend to purchase assets for the business. It is easy to acquire loans in modern times and this makes it a good option for businesses. The only downside about loans is that they have high-interest rates. The rates can also change at any given time depending on regulations by the Central Bank.

Hire purchase

Hire purchase involves acquiring assets after paying a fraction of the total cost to the owner. The total cost of the assets is paid in the form of installments. There are several reasons why businesses settle for hire purchase agreements to acquire assets

Why choose hire purchase to acquire business assets and equipment

  1. Spread the cost f the assets by paying installments over a fixed period.
  2. The assets act as the security and you can cancel the agreement if you no longer require the asset.
  3. Reduces the impact on the cash flow and helps free up capital within your business. You will have funds to cater for other expenses.
  4. Transfer of ownership of the asset from the seller to the business at the end of the hire purchase contract.

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