How to Use Equipment Leasing
Your business needs essential equipment to thrive. Tools, machinery, software, furniture, security systems, and more optimize your company’s performance and success. Unfortunately, purchasing these items is expensive, especially if your operation requires the latest technology to compete within your industry.
Equipment leasing offers many advantages over asset ownership. Some of these benefits include:
Easy Application Process
You can apply for a lease quickly and easily. With financial statements and documents, approval is fast and relatively simple. Owners with low credit scores or just starting and do not have business credit can still obtain equipment leases.
Financing of this kind typically requires no down payment or additional collateral to secure the funding. The elimination of a lump sum payment leaves your cash flow intact for other expenses. You will not need to risk your company or personal assets to obtain this kind of finance arrangement.
Low Monthly Payments
You can structure payments to span over months or years rather than one lump sum. Your customized arrangement allows you to manage your cash flow and budget evenly. It also leaves working capital available for your daily operational needs.
Many equipment leasing options include maintenance agreements or add-ons. This type of contract eliminates the need to hire technicians or have extensive knowledge of your tools and machinery.
If your business must update equipment regularly, leasing provides affordable options. At the end of the contract terms, you can return the items, purchase them or renew the agreement. If you choose to return the supplies, you can replace them with the latest upgrades under new terms. Equipment financing with a lease allows you to stay relevant with advancements and remain competitive.
An outright purchase of necessary machinery or tools commits your company to that technology. If your organization relies on keeping up with recent improvements, buying the assets may affect your ability to do so. Leasing your necessary tools allows you to adapt to the evolution of your industry. It also offers the ability to grow and handle a higher volume of work, as you can acquire more equipment as needed while generating revenue.
Reduce Tax Liability
Depending on your lease arrangement, you can write off both payments and interest on your taxes. With conventional loans, only the interest is tax-deductible.
There are many advantages of equipment leasing. Acquiring necessary tools, machinery and supplies through a lease is a financially efficient way for your organization to remain at the top of your industry.