Four Considerations for Schools When Financing New Equipment

The summer holidays have only just started, but if you’re working in the education sector, and in education finance in particular, a break may be far from your mind. The end of the school year can mark the need for new supplies from playground equipment to IT equipment and gym equipment to pupil entry metal detectors, the list can be endless.

For those working in schools, looking at the finance needed for new equipment or temporary modular buildings can seem like a daunting prospect. There are many regulations to adhere to whilst also trying to secure a great deal for the school.

To make life a little easier, this post lists four considerations for those looking to secure finance for school equipment or temporary modular buildings this year:

Net Present Value (NPV): A simple way to compare one lease provider with another is to compare the NPV calculations in the respective lease quotations. The key drivers in the NPV calculations are the cash price at which you could buy the equipment, the inherent interest rate in the lease and the length of the lease rental term. Critically the NPV must be less than 90% of the cash price of the equipment and some Local Authorities demand an NPV of less than 85%. Normally the lower the NPV the better.

Inflated equipment prices: It has sometimes been the case in the past that schools have ended up funding an inflated price for the equipment.  At Arkle we can work independently of the equipment manufacturers and vendors, leaving you to secure the best deal in terms of the cash price for outright purchase and we can then separately provide a fair price for leasing.

Sample operating lease documents: Ideally the leasing company will provide you with sample operating lease documents complete with return conditions.  At Arkle, we provide these documents in completed form and we insist both the school and if applicable the Local Authority reviews the documents before any commitment is made. This diligent approach protects the school and its employees.

Choose the right finance partner: Choosing the right finance partner will determine how smooth or difficult the whole process is. Securing the right partner will also mean the above considerations are in hand from the start and remember, should you decide to retain the equipment at the end of the lease term you might be working with your chosen finance partner for many years to come.

A good leasing provider will also take the time to listen to your needs and work with you and your team to ensure finance is secured that adheres to the relevant regulations.  A good finance partner will also provide you with completed sample operating lease documents for consideration giving you ample time to review all the terms and conditions.  At no time will Arkle ask you to sign lease documentation whilst questions remain unanswered.  With Arkle only sign when you are absolutely sure. 

At Arkle we have a team dedicated to education finance. We know this complex area requires specialist knowledge, and understand the challenges faced by those who work to secure finance for schools.

You may also be interested in a related blog post where we have gone into more detail about operating lease documentation and vetting tips. You can read it here.

If you wish to learn more about Arkle’s approach to operating leasing for schools and academies please contact our specialist education team on 01933 304789 or use our contact form opposite.

Four Considerations for Schools When Financing New Equipment

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