Startup finance can be a very difficult path to tread without the assistance of a business finance professional.

Our business finance specialist has over thirty years’ experience in business and commercial finance.

Comprehensive has access to a variety of lenders who specialise in this area.

These facilities are available under a full doc, low doc and credit impaired products.

Whether you want to purchase a vehicle for your personal use – or whether you require a car, utility, van, truck, earth moving equipment or any other form of plant & equipment for your business, the Comprehensive can be of great assistance.

We can tailor the right Lender to your circumstances and in doing so, track down a very compatible rate for your acquisition.

Comprehensive can also arrange the funding for commercial fit outs, and in many cases, can arrange sale & lease back facilities in order to raise capital.

Comprehensive can also offer Lo Doc products for our self-employed clients.

Click on the “Contact Us” link and provide your details, and we will contact you to discuss your requirements. Alternatively, please feel free to call us on (02) 4625 4222. We would welcome your call. you

In order to assist you in a brief understanding of the different finance structures for business related vehicles and plant & equipment, we have provided a brief rundown of the different types of facilities traditionally available.

A goods mortgage is probably the most common loan structure used for the purchase of a motor vehicle predominantly for personal use. It is effectively a personal loan, which is secured via a mortgage over the goods – in this case, a car. This structure can also be used to purchase a boat, caravan or any other identifiable and securable asset that is to be used wholly or predominantly for personal use.

Under this agreement you are basically financing your vehicle via a fixed payment term of usually between 12 & 60 months. The repayments are set for the term and can include a balloon at the end. A Balloon will reduce your monthly term payments, but you must then have the money to payout the balloon at the end. We do not always recommend this style, as the refinancing of the balloon can be difficult.

The repayments of a H.P are coded to the Balance sheet. On the commencement of the Hire purchase both an Asset, being the purchase value of the car, and a liability, being the principle and interest payable on the term loan, is shown on the balance sheet. The asset is depreciated according to allowable ATO guidelines and a tax deduction is claimed based on this decline in value in the clients’ tax return. The interest is also claimed as a tax deduction equivalent to the length of the term and the number of repayments made during the course of the year.

The GST can be claimed upfront on your BAS if you account for GST on an accrual basis. If you account for GST on a cash basis then the GST on the purchase must be divided by the number of terms in the loan. For example: if the GST is $2000 and the term of the loan is 60 months then you must claim 1/60 of the $2000 every time you make a payment. This means that you would be claiming (2000/60=33.33) $33.33 in GST every time you make a monthly H.P Payment in your BAS. If you submit quarterly BAS and you have made three H.P Payments in that quarter then you would claim (3*$33.33= $100) $100 in your BAS as a GST Input tax credit on top of your other claims. The repayments contain both principle (GST inclusive) and interest (No GST) in them. So when calculating the GST payable on the H.P loan payment the payment must be split into GST and Non-GST components. For example: a $524.56 monthly H.P payment when divided by 11 equals $47.69 in GST instead of $33.33. Therefore $366.63 (GST inclusive) is a principle payment and the remaining $157.93 (GST Free) is interest.

This is similar to a hire purchase except the GST can be claimed up front regardless of whether you account for GST on a Cash or Accrual Basis. We normally recommend this style of borrowing as the client can claim the entire GST up front and divide the GST over the entire repayments.

Lease

The borrowing term can be anywhere from 12-60 months.

Under a lease agreement, the ownership of the goods remains with the lessor (lender) until the end of the lease agreement. At this point there will normally be a balloon, which must be paid to the lessor to acquire the goods. The balloon normally reflects the expected market price of the item at the end of the term. The repayments are GST inclusive and form part of the tax deduction in the entities profit and loss. No asset is shown on the balance sheet until the end of the term where ownership is properly transferred. However, the lessee (borrower) must keep the asset properly insured and maintained during the lease term.

GST Impact

The GST is claimed as the payments are made. The full lease payment is GST inclusive. For example: if you have a monthly lease payment of $1100 then dividing the full amount by 11 will equal the GST claimable for your BAS ($100). This is the same regardless of whether you are on Cash or Accrual for BAS.

Operating Lease

This financing agreement is the same as financing except that the ownership remains with the lessor (lender). The lessor is also responsible for insuring and maintaining the asset and there is no commitment to purchase the asset at the end of the term. However, the asset may be made available at the end if both parties agree. Generally, this is done at the commencement of the agreement.

GST Impact

The GST is claimed as the payments are made. The full lease payment is GST inclusive.

Hire Purchase Versus Lease

From a financial point of view a HP tends to turn out slightly cheaper when using net present value calculations. The ownership of an asset can help when you are trying to acquirer financing for homes or business. The type of agreement you choose should be discussed with a lender or accountant who can suggest which way to go.

If the asset is expensive to own and needs to be replaced on a regular basis then organising an operating lease may be the best option, especially if you only require the item to complete one special one off job.

Out of all the agreements, the operating lease is the most expensive as the ownership remains with the lessor (lender) who must then try to sell the item or re-lease the item back out at the end of the agreement. Basically, the higher the risk to the lessor – the higher the financing charges.

Factoring is often also commonly referred to as cash flow finance, debtor finance or invoice finance and can dramatically assist in improve your cash flow and fund growth by providing an immediate injection of cash against the value of your outstanding invoices.

It is particularly popular because of the fact that in the vast majority of cases, real estate security is not required to secure the facility.

When you raise an invoice, the financier can release up to 90% of the value of that invoice within 24 hours once the facility is established, with the remaining 10% being paid (less the service fee) once your client pays the invoice.