Business owners often have difficulties in acquiring the proper equipment to ensure that their company succeeds. Equipment financing, either in the form of a loan or a leasing program, can help to resolve this dilemma. When you take out a loan, the equipment itself generally serves as collateral. Equipment leasing involves monthly rental payments, and at the end of the leasing term, you can return the equipment, buy it, or extend the lease. Here are some advantages of using equipment financing to obtain the equipment you need.
Keep Cash Flow Strong
If you purchase your equipment outright, your cash flow may weaken as a result. A large portion of your working capital may be used up and therefore unavailable to take care of other expenses. Equipment financing, with its moderate payments, keeps cash flow strong and working capital free to meet company needs as they arise.
Applying for equipment financing can be accomplished very easily and quickly. Depending upon the type of equipment you require, you can often complete the application process and receive an approval within 24 hours. For larger equipment items, though, the lender may need a week or two to finalize the process.
Upgrade to Cutting-Edge Technology
Cutting-edge equipment is expensive and unaffordable for many business owners. However, using equipment financing you can obtain state-of-the-art technology without a prohibitive upfront cost.
Free Up Credit Options
If you use equipment financing to purchase the equipment you need rather than a business term loan, you keep your credit options open in case your company requires further funding for other reasons. When your business needs working capital in the future, you still have the possibility of acquiring a business loan.
Obtain Tax Benefits
With equipment financing, you typically make interest payments to the lender, and these payments are generally tax-deductible. When you lease equipment, you can usually write off all of your lease payments as business expenses. Either way, your company comes out ahead at tax time.
For more advice on equipment financing, get in touch with Sterling Capital Consulting.