The Benefits of Using Equipment Financing
In today’s economic climate and how quickly technology is becoming obsolete, approximately 80% of all companies in the U.S. are using some type of equipment financing. With equipment financing, you have the ability to acquire equipment for a fixed rate, for a certain amount of time, without having to buy the tools or equipment from their working capital or cash. When you lease equipment, it lets you avoid many of the uncertainties that are related to owning equipment and enables you to focus on using the assets or the equipment to help operate and grow your business.
There are several reasons more and more companies are choosing to lease their tools and equipment, instead of purchasing them.
Cash Flow Concerns
Preserving cash flow is beneficial and one of the most appealing aspects of equipment financing. With a real lease, you receive a lower cost of funding because you can benefit from all the tax benefits that are passed from the lessee thanks to reduced payments.
Speed and Convenience Factors
In many cases, leading equipment is a process that is much faster than buying outright. This is because most businesses will not have all the capital needed to purchase the equipment, which means they must acquire financing. This can take weeks or months or more. With leasing, the process is completed much faster.
Capital Conservation
When you lease equipment, it does not require you to spend a lot of cash upfront for purchasing equipment. With a lease, you can overcome any budget constraints you may be working with. Your lines of credit and existing cash remain liquid or free for your other working capital that is in place.
100% Financing
When you lease equipment, you receive 100% financing. However, a traditional loan to purchase equipment requires you to pay some type of down payment. Usually, the “soft” fees incurred when purchasing equipment is purchased can be financed by choosing the lease option. Some of the costs include interest charges for advance payments, delivery charges, training costs, and use or sales taxes. These costs usually are not financing with more traditional equipment financing options.
Equipment Financing and What it Offers
While equipment financing is not right for all businesses, it offers several benefits. Keep this in mind to see if it is something that could benefit your business. This is going to help you make the right decision and help you maintain good financial health in your business.
