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Equipment finance

Get essential business equipment by choosing a competitive equipment finance option.

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A wide range of equipment and machinery — from specialised medical equipment to the latest IT devices — can be essential to ensuring your business’s financial success. Equipment finance in Singapore can help you access the funds for your business to acquire essential machinery and continue operations.

Read on more to find out about equipment finance options in Singapore, and which could suit your business best.

What is equipment finance?

Equipment finance, which typically falls under ‘fixed assets loans’, gives your business access to funds for purchasing specialised equipment. Whether you’re looking to purchase a forklift to move goods or specialist medical monitoring machines for your private practice, equipment financing allows you to acquire the required machinery while better managing your cash flow.

Choosing the best type of equipment finance for your business will depend on a range of factors including your financial situation, taxation needs and budget.

What are the ways I can finance my business equipment in Singapore?

  • Equipment term loan. The asset you wish to buy will be used as security for this type of business loan. This means that you own the item in question from the outset and can claim any interest charges on your tax return, or claim capital allowance for the depreciation of the asset. But if you fail to repay the instalments, the lender reserves the right to repossess the purchased equipment
  • Hire purchase. This is where a financier purchases an asset, such as a car, on your behalf and then you buy it off them in instalments. Under this arrangement, the financier owns the asset until you have paid it off. Once you’ve paid back the loan on your business vehicle in full after the term ends, the ownership of the financed asset will typically be transferred to you.
  • Finance lease. A finance lease involves a lender purchasing the asset and then renting it out to a business for an agreed period. You can choose from flexible repayment terms to match your budget, while the rental payments you make are usually tax-deductible.

How do I compare equipment loans in Singapore?

  • Find out the interest rate. The interest rate offered will influence how much you pay over the life of your loan. You’ll also need to consider whether you want the security of a fixed rate or the possibility for saving that a variable (floating) rate offers.
  • Compare the fees and charges. Read all product information closely to know if the finance option you choose contains hidden fees.
  • Establish if there are any taxation benefits. Each equipment finance option has its own potential tax benefits, so seek advice from your accountant to learn which one suits you best.
  • Compare loan terms. How long can you take to pay off your asset? Terms are typically 5-8 years long, so look for equipment finance that offers a term suited to your financial situation.
  • Search for flexible repayment options. How often does the finance option let you make repayments? Are there any early repayment penalties? Look for a solution that lets you schedule your repayments in a way that suits your budget.

Pros and cons of equipment finance in Singapore

  • Range of options. If you’re looking for equipment finance, you can find options to suit a wide range of business needs and budgets.
  • Keep your business running. Equipment finance gives your business access to essential items that you might not be able to afford upfront, helping you stay competitive in the marketplace.
  • Flexible repayments. Most equipment finance options allow you to tailor a repayment schedule to suit your budget.
  • Too many choices. The range of finance options and potential tax benefits available can be tough to wrap your head around, so you may need to shop around before choosing the best equipment finance solution for you.
  • Potential debt problems. Keep in mind that failure to repay your loan can lead to serious debt issues, which can include the repossession of your assets.

What should I be looking out for with equipment finance in Singapore?

Avoid getting into a financial agreement that you simply cannot afford to service. It’s important to consider how essential any equipment is before you commit to a purchase, as well as make sure you’re aware of your ability to make repayments on time. Another common issue is that some people can get confused by the array of equipment finance options available. Seeking professional assistance from your accountant can be a good way to go to help you make the right choice. Also, keep in mind that this type of borrowing is just one way to raise working capital for your business.

Frequently asked questions

Which equipment finance option should I choose?

This is affected by a host of considerations including how you do your accounting and your projected cashflow. If possible, seek advice from an accountant to determine the best product for your needs.

What fees and charges should I keep an eye out for?

Read product documents closely to look for things like establishment fees, late payment fees and early repayment fees. It’s also a good idea to keep an eye out for ongoing monthly or annual fees.

I need to purchase some bakery equipment and some refrigerated display case. What are my financing options?

For financing, you’ve multiple options including manufacturer leases, online business loans and government programs. Read our article to learn more about tractor financing.

I own a bar. Can an equipment loan benefit me?

It could, especially if you’re looking to finance larger equipment purchases, or even start your own microbrewery and require fermentation tanks.

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