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NGExpert financial copywriter
Today, almost every US business uses IT technology to shape the products and services they sell, operate their communications, control their accounting, drive their marketing, or oversee their logistics and deliveries.
Page written by Chris Godfrey. Last reviewed on August 26, 2024. Next review due March 1, 2025.
IT technology has become so vital for business success that South African SMEs who do not have the latest tech are putting themselves at a commercial disadvantage. However, even though IT equipment is far cheaper than it used to be, it can still make a major dent in cashflow when it comes time to purchase. Fortunately, technology equipment finance is available to keep organisations on the IT cutting edge and cut the pressure on their cashflow. Secure the tech you need now, pay for it over time, never worry about your IT equipment again.Â
IT equipment finance – or technology equipment finance – are loans and leases to obtain IT hardware and software for business purposes. Because IT equipment depreciates very quickly, buying it with cash makes poor business sense. It’s far better to pay for your technology over months or years, build upgrades into the finance agreement to slow down obsolesence, and preserve your valuable working capital for other areas of your business – such as a mergers, marketing, and expansion.
Some brokers will also have access to other funding for businesses, such as working capital, asset-based lending, unsecured business loans and more.Â
No matter if you’re a startup or a small business requiring a single office set-up, or you’re a full-size SME seeking an organisation-wide IT upgrade and installation, you can finance everything you need with technology equipment finance and leasing. Â
IT equipment finance can help new businesses to secure the technology they need with either an IT equipment finance loan, or an IT equipment lease. What’s the difference between these finance options? See below.
These are loans that allow the borrower to pay for their IT equipment over time, spreading the cost across months or years. In most cases, the borrower pays the loan back, (plus interest and any fees), in fixed monthly instalments. At the end of the loan, the borrower owns the equipment outright.Â
Key benefits: Ease the strain on cashflow as you buy the IT equipment you need. Interest is usually a fully tax-deductible expense, and the payments form part of your capital equipment depreciation plan. May offer periodic upgrades to keep your tech up to date. Many IT finance options will offer an automatic buy-back at contract end.
Similar to a loan, except the borrower (lessee) is not buying the equipment, they are renting it over an extended period. At the end of the rental contract, the equipment will either go back to the lessor (equipment provider), or the lessee may have the option to buy the tech for a pre-agreed sum. May offer periodic upgrades to keep your tech up to date. The lessor may be responsible for maintenance of the IT equipment.
Key benefits: Eases the strain on cashflow. Usually comes with lower monthly payments than IT equipment financing. Does not appear on the company balance sheet as a liability. In most cases, the entire payments, (not just the interest), can be written off as fully tax-deductible expenses.
Your IT system is only as good as the software you run on it, which means it is as important to maintain the latest versions of your application and operating programs as it is to have the newest hardware. Even a simple software upgrade can vastly improve your organisation’s productivity and efficiency. Once again, instead of paying for new versions of software out of working capital, use a software loan to spread the load. Pay over time. Build automatic upgrades into the contract to keep your software systems at peak performance.
Software loans can cover:
Securing IT hardware and software with technology equipment financing can deliver significant business advantages:
Technology equipment finance is a specialist area with differing rules of application and requiring deep knowledge of the sector from the lender. South African SMEs seeking funding may find themselves forever searching and making applications to lender after lender without success. The delays this can create could cause them to lose revenue and leave their business vulnerable to competition. Instead, working with a broker, who can access technology equipment finance from a wide range of lenders is a better way to go. No more cold calls and endless demands for information, just tell us what you need and leave the rest to us.Â
Give your business the IT equipment it needs to grow. Register with Swoop to find the best rates, the best terms and the best technology equipment finance today.
Written by
Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.
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