Introduction – Equipment Finance
Equipment finance refers to a financing option that enables businesses to acquire the necessary equipment or machinery for their operations. It involves borrowing funds from a lender, which is then used to purchase or lease equipment for a predetermined period. The equipment itself serves as collateral for the loan, and the borrower is typically required to make regular payments until the loan is fully repaid.
One of the primary reasons businesses choose to invest in equipment finance is that it allows them to acquire essential assets without having to make large upfront payments. This can be particularly advantageous for companies that need to upgrade or expand their operations but lack the necessary capital to do so. Additionally, equipment finance can provide tax benefits and allows companies to manage their cash flow more effectively by spreading out the cost of the equipment over a longer period.
The future of equipment finance looks promising, with continued growth expected in the coming years. As technology continues to advance and businesses seek to remain competitive, the demand for updated and specialised equipment will only increase. Additionally, as more companies shift towards remote work and digital operations, there will be a greater need for technological infrastructure and related equipment.
How equipment financing works
- Acquisition of Machinery by Large Corporations: Large enterprises necessitate significant investments in machinery to facilitate their expansion. For instance, Boeing requires aeroplane parts and machinery, hospitals require costly medical equipment, and shipping companies need ships. As a result, companies are compelled to either utilise a significant portion of their cash reserves or accumulate substantial debt on their balance sheets.
- Equipment Leasing by Corporations: A majority of corporations, specifically eight out of ten, prefer to lease their equipment instead. Axba invests in special purpose vehicles that procure the necessary machinery and then lease it out to the companies.
- Repayment and Redemption: The companies make monthly or quarterly payments for the duration of the contract and a lump sum payment at the end of the investment period to acquire ownership of the machinery. The agreement is structured as Purchase Money Security Interest, providing Axba with ownership of the machinery and the authority to repossess it in the event of payment defaults.
Equipment Finance with Axba
Axba also invests in over 10 alternative assets, with equipment finance being one of them. By diversifying their investment portfolio, they are able to provide their clients with a wider range of options and opportunities to grow their businesses. With a focus on innovative and emerging markets, Axba is well-positioned to capitalise on the growing demand for equipment finance and other alternative assets. As the market continues to evolve, Axba remains committed to providing their clients with cutting-edge solutions and exceptional service.
Equipment finance constitutes a significant portion of Axba’s investment portfolio, accounting for approximately 20% of their overall investments. This is because equipment finance is a stable and reliable asset class that offers consistent returns and is less volatile than other types of investments. Additionally, as businesses continue to expand and upgrade their operations, there is a growing demand for equipment finance, making it an attractive investment opportunity for Axba. By investing in equipment finance, Axba is able to provide their clients with a valuable service while also generating solid returns for their investors.
In conclusion, people should consider investing with Axba because of their diverse investment portfolio, with equipment finance being one of their significant investments. As a company that focuses on innovative and emerging markets, Axba is well-positioned to capitalize on the growing demand for equipment finance and other alternative assets. Furthermore, Axba’s commitment to providing cutting-edge solutions and exceptional service to their clients sets them apart from other investment firms. With their focus on stable and reliable asset classes, such as equipment finance, investors can trust that their investments with Axba will generate consistent returns over time. Overall, investing with Axba provides a unique opportunity to diversify one’s investment portfolio while benefiting from a company with a strong track record and a clear vision for the future.