Low residual value
You can take over ownership of the equipment for a standard 4% of the investment value.
Straightforward accounting treatment
Your equipment is reported via the balance sheet: capitalisation and depreciation.
Easily apply digitally
You can easily apply for your investment credit in KBC Touch, KBC Mobile or KBC Business Dashboard.
Entrepreneurs like you, whether starting out or established, often have big plans. And good for you.
But it can sometimes be discouraging when you realise that you can’t immediately set yourself up with the equipment you dream of. Or perhaps you’d rather keep a little capital to one side for other potential investments.
KBC offers three different formulas that mean you really can afford the IT equipment, office furniture or machinery you need.
You can finance your equipment, for instance, using a traditional investment credit. In this case, you immediately become the owner of the goods you buy: KBC simply helps you finance the purchase.
Renting is a second option that entrepreneurs often choose. This is an off-balance-sheet leasing method, in which you as a business pay a regular fee to KBC (similar to hiring) for use of the equipment.
Or perhaps a leasing method would suit you better. As lessee, you place the purchased equipment directly on your balance sheet and work via capitalisation and depreciation. You get the right to use the goods, but KBC remains the owner of your purchases. We take a closer look below at what leasing entails.
What is leasing?
In the case of leasing, a lease company like KBC buys the equipment for you. You then pay a monthly fee to use it. When the contract ends, you can assume ownership of the goods by paying the residual value.
When you lease the equipment, you decide yourself what type of goods to buy and where. You yourself also choose what insurance cover, if any, you want.
The purchase invoice is in our name, as KBC owns the goods. You do, however, get the right to use your purchased office furniture, say.
What’s more, there is nothing to pay upfront. KBC pays the supplier the full amount of the investment, including the VAT. You then repay this amount, VAT included, over the term of the contract.
The minimum investment amount is 9.000 euros (ex VAT).
How does leasing work from the accounting point of view?
Once you’ve purchased the machinery, hardware or other business equipment, you obviously have to process it in your accounts.
With leasing, this is done through capitalisation and depreciation of the goods on your balance sheet.
There’s no need to worry about additional collateral, which is not requested. This means you can keep your collateral capacity for other commercial loans.
More scope therefore remains for funding your operating capital and other possible investments.
How is the price of leasing calculated?
You have to make lease payments to KBC for up to five years (although this can be longer in the case of large investments).
You can reduce your monthly lease payments via the residual value of the equipment, which is agreed in advance. This value is between 1% and 15%. The standard figure is 4%.
You purchase machinery with a value of 20,000 euros The residual value in your contract is 4%. This means you are spreading 19,400 euros, not including interest, over the selected term.
What is the residual value at the end of your contract?
Each lease contract agreed with KBC includes a residual value specified at the outset. This enables you to purchase full ownership of the equipment at the end of the contract.
The standard figure at KBC is 4%.
What’s the difference between renting and leasing?
The difference between renting and leasing is a frequently asked question. The two resemble one another, but it is important to take account of the differences.
Their accounting treatment, for instance, is not the same. In the case of leasing, you capitalise and depreciate the goods on your balance sheet, in a similar way to an investment credit. Renting, by contrast, enables you to enter the invoices in your income statement as an operating expense, provided this is approved by your bookkeeper or auditor.
What’s more, renting gives you the possibility of a higher first invoice of up to 30%.
Whichever method you choose, you always have a purchase option at the end of your contract. There is a difference, however, in the residual value specified there.
The standard figures at KBC are 16% for renting and 4% for leasing.
What happens at the end of your contract if you don’t want to assume full ownership of the business equipment and KBC is unable to sell it on at the agreed residual value? In that case, you pay the agreed residual value guarantee. Unless, that is, you agree a repurchase commitment in your contract. In that case, a third party undertakes to purchase the goods at an agreed price.
What’s the difference between an investment credit and leasing?
When you opt for a traditional investment credit, you become the full owner of the business equipment you purchase – KBC’s role is limited to the financing.
If you choose leasing, by contrast, KBC becomes the owner of your purchases. You then have the right to use the goods.
Investment credit, leasing or renting: which is best for you?
To determine which approach suits you best, you need to take account of your personal preferences and your financial situation.
We try to set out the fullest possible picture of each formula in our pages on investment credits, renting and leasing.
This will enable you to carefully compare the respective accounting treatment and purchase option terms. We also show, for instance, precisely who the owner is in each situation. It all makes it a lot easier for you to find appropriate financing.
How do I apply for financial leasing?
- Choose the equipment you want to invest in and ask the supplier for a quotation.
- Get your credit yourself online.
- Application approved and contacts signed online? We will confirm the order with the supplier.
- You can collect the equipment as soon as the supplier contacts you. We do the rest.
- You pay the regular invoices to KBC.
A quick summary of the benefits of leasing
- You yourself decide what type of goods to buy and where. This goes for any insurance too.
- We’ll let you know within 24 hours whether your application has been approved.
- There’s no down payment. KBC pays the full investment amount to the supplier, including VAT.
- You increase your lending capacity. Additional collateral is not requested, so you can retain your collateral capacity for other commercial loans. You therefore have additional scope for financing your operating capital and other possible investments.
- You repay the VAT over a longer period and KBC takes care of the prefinancing.
- Accounting treatment via the balance sheet: capitalisation and depreciation.
- If you want, you can buy the goods at the end of the contract for the residual value specified in the contract (4% as standard).