- Higher borrowing capacity without additional collateral
- Lower monthly repayments than with other forms of financing
- Rental invoices treated as expenses in the income statement
New and existing businesses have lots of things to consider. For instance, you might have to buy office equipment for all your staff or invest in new machinery.
That’s not always easy if you have to come up with the cash to pay for it all yourself. Or maybe you’re planning to use your money for other investments?
Whatever you're after, KBC has three different formulas to help cover the cost of equipment and machinery or property for your business.
You can use a traditional investment credit for purchasing fixed assets such as property for your business, company cars and equipment.
Or perhaps a leasing method would suit you better. As lessee, you capitalise and depreciate the purchased equipment directly on your balance sheet. You get the right to use the goods, but KBC remains the legal owner of your purchases.
We take a detailed look below at the third option, renting. This is an off-balance-sheet financing arrangement where you, as a business, pay a regular rental fee to KBC for use of the equipment.
In the case of renting, KBC buys the equipment for you. You then pay a monthly fee to use it.
KBC purchases the goods, but you get the right to use them. Additional costs, such as for repairs or if insurance is taken out, are paid by you.
Renting is only available for goods which are and will continue to be moveable. Goods that become immovable upon installation or assembly (such as built-in furniture, alarm systems or solar panels fitted to a building) are not eligible for renting. Neither are items for which there is an active resale market (such as construction machinery, agricultural and horticultural vehicles).
When the contract ends, you can buy the items at the residual value agreed in advance in the contract (16% of the purchase price as standard).
You have the freedom to decide what type of goods to buy and where. What's more, you can also choose what insurance cover, if any, you want.
One of the benefits is that you don't have to pre-finance VAT, nor do you have to pay anything upfront. KBC pays the full amount of the investment to the supplier, including the VAT. You then spread your VAT payments via the monthly rental invoices.
The minimum investment amount is 9 000 euros (excl. VAT).
If you opt to rent, you have to process the monthly rental invoices in your accounts. They are simply entered as an operating expense in your income statement.
You do not have to put up any collateral. This means you can use your collateral to secure other business loans, enabling you to finance other investments. In other words, you are increasing your borrowing capacity.
You can pay a higher first invoice of up to 30% when you rent. This can be more tax-efficient if you are self-employed and want to maximise your expenses, but it is certainly not compulsory. This higher invoice at the beginning of your contract – and the high residual value at the end – mean you can sharply reduce your monthly payments.
At KBC, the higher first invoice is part of the agreed repayment schedule. For instance, if you have rented for 60 months, you pay the higher first invoice once and then make 59 monthly payments.
You buy a fork-lift truck for 10 000 euros and opt for a higher first invoice of 30% (3 000 euros). The standard residual value when renting is 16% (1 600 euros in this case). In this way, you are only spreading 5 400 euros, not including interest, over the selected term.
When the contract ends, you can purchase the goods at the residual value agreed in advance in the contract (16% of the purchase price as standard).
We frequently get asked about the difference between renting and leasing. The answer is they are similar, but there are some important differences:
• Purchase option or residual value at the end of the contract: as standard, it is 4% for leasing and 16% for renting.
• Accounting treatment: when 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 record the invoices in your income statement as an operating expense.
• Being self-employed, you include a renting arrangement with a higher first invoice in your tax return, whereas you can't with leasing.
When you opt for a traditional investment credit, you become the full owner of the business equipment you purchase. KBC merely helps you finance it.
When you opt for renting, you make monthly rental payments during the financing term in order to use the equipment. You can purchase the business equipment at the end of the contract by paying the residual value or exercising the purchase option.
As the item concerned is also the collateral, renting in most cases will not require additional collateral to be put up, unlike an investment credit when that mostly has to be done.
Due to the higher residual value and – if requested – higher first invoice amount, the monthly rental payments will be lower than the monthly repayments for an investment credit.
There are no hard and fast answers to this question. A lot depends on your personal preferences and your financial situation.
Find out what's right for you by comparing the different options in our handy table.
1. Choose the business equipment you want to purchase and ask for a quote from the supplier.
2. Apply for your financing online using KBC Mobile, KBC Touch or the KBC Business Dashboard. You know right away whether your application has been approved or needs to be checked by KBC.
3. Once your financing application is approved and the contacts signed online, KBC will place the order with the supplier.
4. Pick up your business equipment as soon as the supplier tells you it’s ready. KBC will then do the rest.
5. Pay the regular invoice to KBC.
• You are free to decide what type of goods to buy and where, and what insurance cover to take out for them. KBC pays the full investment amount to the supplier (including VAT).
• You increase your borrowing capacity. No additional collateral is usually required. This means you hold on to your collateral for other business loans and increase the scope for financing your operating capital and any other investments.
• You repay the VAT over a longer period and KBC takes care of the prefinancing.
• You record business equipment as expenses in the income statement, provided this is approved by your accountant or auditor.
• You can opt for a higher first invoice of up to 30%.
• You can now work out conveniently online how much renting costs and apply for it immediately online, as well. You get the same personal rate online as you would at our branches. You can also see straight away whether your application has been approved or needs to be checked by KBC.
Generate a no-obligation proposal
At KBC, you can save time by not having to make appointments at your branch. You can easily work out and apply for your financing online in just a few steps:
1. Choose the purpose you want to borrow for
2. Enter the amount you want to borrow
3. Specify the period over which you'll repay that amount
4. Get a no-obligation proposal right away
You can then convert our proposal into an application and check how feasible your financing is.
At KBC, you always get the best personal rate for you regardless of whether you've applied online or at your branch.