Vending machines are a fantastic way for businesses to generate passive income, improve customer convenience and satisfaction, and they also help to enhance workplace amenities.
Whether you’re a startup looking to break into the vending industry, or an established company seeking to expand your fleet of vending machines, securing the most suitable finance for your business is crucial to managing cash flow and supporting business growth.
Read below to explore the various finance options for purchasing vending machines through commercial finance:
Why finance a vending machine?
Investing in vending machines can be a cost-effective way to add to your revenue streams, however purchasing them outright can require significant upfront investment. Financing options allow businesses to spread the cost of acquiring vending machines over time, ensuring cash flow remains stable while benefiting from the profits generated from the machines.
The most suitable finance option for your business will depend on a number of factors, including your individual business requirements, financial situation, and long-term commercial goals. There are several available options:
Hire Purchase (HP)
Hire purchase is a popular choice for businesses that want access to vending machines without paying the large upfront sum of purchasing them outright. With HP, you make fixed monthly payments over an agreed period, and once the final payment is made, full ownership of the machine is transferred to your business.
- Fixed monthly payments make budgeting and cash flow forecasting easier
- Retain vital working capital by spreading costs over monthly payments
- Potential tax benefits from capital allowances
You are responsible for the maintenance and servicing of your vending machine in a HP agreement, as you will eventually become the owner of the machine.
Finance Lease
A finance lease allows businesses to use the vending machine without the commitment of ownership. You pay regular monthly lease payments for an agreed term, and at the end of the lease, you may have the option to extend, upgrade to newer models, or return the machines to the finance company.
- Lower initial outlay compared to buying outright
- Flexibility to upgrade equipment at the end of the lease
- Potential tax benefits, as lease payments are often tax deductible
With a finance lease, you don’t end up owning the machine at the end of the term, meaning these structures are ideal for businesses looking for use of vending machines without the desire to retain ownership of them.
Business Loans
A business loan can be used to finance the purchase of vending machines. This option provides a lump sum that can be paid over a fixed term with interest.
- Flexibility in using the funds for additional business expenses
- Ownership of the machines from the start
- Predictable repayment structure, allowing you to produce accurate financial forecasts
Business loans typically require a strong credit profile to access the most competitive rates, however, at Mill Wood, we work with a panel of lenders who view finance applications through a more commercial lens than high street banks. As such, they assess applications not only on credit profile, but your business case and commercial viability.
Operating Lease
An operating lease is a rental agreement whereby you pay for use of the vending machines without ever owning them. Operating leases are ideal for businesses that want to regularly upgrade their machines without the responsibilities of ownership.
- No large capital investment required
- Maintenance and servicing are typically included
- Ability to regularly upgrade to new models
Operating leases are much like rental agreements, meaning you never own the machine during its lifetime. This means you avoid the hassle and responsibility of having to maintain and service the machine.
Choosing the most suitable finance
When deciding on the best finance option for your business, consider the factors below:
- Your business model: Do you want to own the machines at the end of the agreement?
- Cash flow and budget: Can you afford the monthly repayments?
- Tax considerations: Certain options provide tax benefits that could make a difference in affordability
- Growth plans: If you plan to scale up, a leasing model may offer your business more flexibility
Working with a broker who has the knowledge and industry expertise to guide you will be of great use to your business, helping you avoid spending too much time assessing your options, whilst bridging the gap between your business and lenders who provide such finance – giving you access to the most favourable terms.
If you’re interested in financing vending machines for your business, get in touch with our brokers today. We can help tailor a solution that suits your business’ requirements and supports your long-term success.
