Whether you are the owner of a new business or an established company, you may be confused with the challenge of equipment financing. Should you purchase new equipment or get bank business loan? Better yet, should you apply for equipment lease financing?
What advantages can leasing equipment bring to a small business? In this article, let's talk about the main reasons why you should consider business equipment leasing.
Save Your Business Budget.
Having a steady cash flow is important for any business. When you lease equipment, you can use your available cash for other expenses and save the rest for emergency purposes.
Yes, no down payment is required to lease equipment. Unlike bank equipment loan where you need to pay for the cost of taxes, shipping, and installation separately, leasing is 100% financing, meaning everything else is included with your payment.
Get Access to the Latest Equipment.
As technology continues to go forward, new and better models of equipment are constantly introduced in the market. Obviously, latest models would cost more than older ones. The price of equipment may not give you the option to buy state-of-the-art equipment. On the contrary, when you lease, you can choose any type of equipment you want without worrying about the high price.
No To Obsolescence.
Consequently, the equipment you buy this year could have been obsolete by the next few years. Purchasing limits your options since you have invested your money on the equipment you bought. By leasing business equipment, you can always have the choice either to retain or replace the equipment for better ones.
Frees Up Your Business' Line Of Credit.
If you are going to obtain a bank loan and use the money for purchasing equipment, the high price of equipment can eat up your business line of credit. When you lease equipment, there is no need to use up your business line of credit. If needed, you can still apply for a loan and use the money for buying more supplies, for marketing purposes, or for hiring more workers.
Pay In Installments.
Only equipment lease financing allows you to pay for the equipment as you get to use it. There is no need to shell out a large amount of cash right away. You can even choose an installment plan (monthly, quarterly, annually, etc) that is most suitable to your financial capability as most leasing companies offer flexible repayment terms.
Enjoy Tax Benefits.
Unlike purchased equipment, leased equipment is 100% tax deductible. Imagine how much money you can save from the tax benefits alone. Every cent that you can save counts a lot especially if you are just starting up the business.
The process of applying for a business equipment lease is much simpler than applying for a bank loan or equipment loan. You can shop around and compare leasing companies from the internet and submit your application online as well. Most leasing companies grant approval in 24 to 48 hours. As soon as you are approved, you can expect to get the equipment you ordered within the next 3 to 4 weeks.