Finance for your IT: funding hardware, software and service contracts

You need the latest hardware for reliability - and the latest software to take full advantage of developments like the Cloud and Software as a Service (SaaS).

What's more, whatever the size of your business,  your IT is business-critical. You can’t afford downtime or inadequate performance. Your IT will represent a sizable investment.

At Rangewell we can provide solutions to help you afford those investment demands.

Your IT dealer will offer finance

You may have straightforward IT needs that you can answer simply by going to a supplier and ordering the combination of hardware and software licenses that you need. If your business computing is complex enough, you may be using a provider who will provide both hardware and software and support them with a service agreement.

In both cases, your provider will probably be able to offer finance plans to spread the cost of your IT investment. These plans may look attractive, but often actually include an additional profit element for the supplier.

By arranging a cash payment, and arranging finance from a specialist supplier, it is usually possible to make big savings in the cost of your IT.

You can still take advantage of warranties and support - but you can make big savings too.

The funding solutions to consider

There are several ways to provide the funding you need, including loans, cash advances and asset funding.

Asset finance – securing the finance on your IT assets

Asset finance can bring you the software, hardware or systems you need straight away, and let you pay over time.

Asset funding in the form of IT finance provides funds for specific pieces of equipment. A finance provider will buy the equipment for you, and let you pay them back over time. You spread the cost over the term of the agreement, while your equipment is already working for you.

Asset finance can be the most cost-effective way to buy equipment because the lending is secured on the assets themselves. The risk to the finance provider is reduced because if you were to fail to repay, they would simply repossess the asset. This means that they can reduce the rates they charge you.

There are several types of Asset Funding.

Hire Purchase – spreading the cost of buying

Hire purchase is a simple way to spread the cost of buying an asset. You pay a deposit plus fixed monthly instalments for the agreed term, which generally lasts between 12 and 72 months. The assets become your property as soon as the final payment is made.

Hardware Purchasing pros:

Ownership: If you expect your hardware to last you several years and not to become obsolete in the next two or three, owning it may be a better option. But remember, most IT equipment will require replacement within three years.

Hardware Purchasing cons:

End of Life disposal. Old IT must be disposed of securely, and in an environmentally appropriate way, in accordance with WEEE regulations. You must also remove and destroy all sensitive data that may have been stored in it.

Upkeep: When you buy your own equipment, you will be responsible for keeping up with upgrades, updates, patches and troubleshooting.

Operating leases

Operating leases work like a rental agreement. You pay a monthly rental charge to use the asset. Maintenance, repairs, and registration can be the responsibility of the leasing company. Operating leases can be ideal for technical equipment with a limited life that you do not wish to own outright.

Finance leases

Finance leases also let you borrow equipment for a set time, but maintenance, repairs and running costs will become your responsibility. Finance leases are common with larger cost arrangements, such as equipping all the workstations in a large organisation with identical hardware, and providing suitable infrastructure and access to software and fileservers.

Hardware leasing pros:

Life Cycle: The usual lease runs about two to three years, the average lifetime for business IT. Leasing computer equipment allows you to keep up with technology.

Cashflow: Leasing avoids the immediate cost, protecting your cashflow. Money spent on leasing your computers becomes an operating expense.

Maintenance: A lease can leave equipment service, patching, update support and warranties the responsibility of the lease company.

Hardware leasing cons:

Long-Term Commitment: When signing a lease you are obligated to make payments for the entire lease period regardless of how much you use your equipment. Large early-termination fees may apply if you need to get out of the lease.

Refinance Existing Assets

Your business has money tied up in IT assets. Asset refinance lets you release that money to fund other areas of your business, while still having full use of your assets. The finance company will buy the asset from you, providing you with the cash sum you need. They then let you buy the asset back from them, under a new finance arrangement.

You can reinvest the cash you have raised, or simply use your new arrangement to reduce your monthly outgoings. Find out more about Asset Refinancing here.

The help you need with Asset Finance

There are many different types of asset finance and many different providers. Terms and rates can vary widely.

By searching across the entire market, we can often find asset finance plans which actually undercut the 0% finance offers provided by dealers, distributors and solutions providers.

Please call us for details.

Finance for Software as a Service

Traditional IT companies may bundle software licenses with hardware to provide a turnkey package for your business.

They may be unable to provide solutions for Software as a Service. This is the cloud-based software provision model which looks set to become a mainstream approach, allowing you to access the software you need, as you need it.

At Rangewell we have already worked with a number of companies looking for SaaS financing. Whilst this is a relatively new area in finance, and not all lenders are comfortable with the product, we have expertise in the space and know the lenders that are able to help.

Other types of borrowing

There may be some types of IT costs that are not covered by asset finance arrangements. The cost of infrastructure such as cabling, fitting out a server room with suitable environmental provisions may require other types of funding. Setting up a work area for your IT team or even bringing in specialist consultants to build a proprietary solution for your business might also require different finance models.

Secured loans can be used to borrow large sums of money, upwards of £250,000. They are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home or your business premises.

You can have longer to repay than other types of loan and enjoy lower interest rates. This can mean lower monthly repayments.

A secured loan could allow you to build and equip a major IT suite and develop a new IT solution.

Unsecured business loans can be suitable for smaller sums, from £5000 upwards - although some lenders will not let you borrow more than one month’s turnover with an unsecured loan. The loan will be arranged for your business, but you will need to provide a personal guarantee.

Unsecured loans have a maximum term of 5 years. They may be appropriate for smaller costs, such as providing training for your teams.

We’ll discuss your needs, and help you find the kind of loan to fit your business. Please contact us for details.

Why you should call us to cut the cost of finance for your IT

Getting the most cost-effective source of finance for your IT is a key task for your business.

At Rangewell, our expertise works for you. We know the lenders who can offer the most competitive rates for all types of finance. We offer every type of finance including Professional Loans, Unsecured & Secured Loans, Invoice Finance, Asset Finance, Merchant Cash Advance, Commercial Mortgages, Bridge Loans, Property Development Finance, Growth Finance and more.

We can help you cut the cost of your IT. Call us to discuss your needs.