The Benefits of Equipment Financing
Owners of new startups and small growing businesses must understand the equipment financing options available to them. Purchases of this type are expensive as a company needs to buy many items at one time.
Types of Equipment
There are various things a company may need to operate efficiently. Some of these include:
- Phone systems
- Office furniture
- Heavy machinery
- Security systems
- Company vehicles
Both new and small businesses may have trouble qualifying for traditional bank loans. Equipment finance through leasing is customizable to meet a company’s unique requirements. Some plans can start with lower monthly payments that increase over time give new companies the ability to earn profits.
No Down Payment
Leases typically do not require a down payment, allowing a business owner to replace outdated tools when needed or get their new operation started right away. When purchasing items with a loan for this purpose, the assets acquired are the collateral that secures the borrowed amount.
Financing purchases enables organizations to maintain cash flow and preserve working capital for daily operational expenses. Businesses can budget evenly with customized payments that work with their specific needs, such as seasonal revenue fluctuations.
Financing leave capital available for other expenses. Purchasing equipment outright can leave a company short on cash flow, making it difficult to cover operating expenses.
Equipment financing helps a business get machinery, office supplies, computers, furniture and other necessary items as they are needed to generate revenue.
Companies need new technology to stay competitive with others in their industry. Some leasing programs allow for technology upgrades or replacements within the contract terms.
With a lease, a business that is just starting can avoid the uncertainty of investing asset ownership until it meets its desired goals. A company that owns assets outright is responsible for all repairs, maintenance and replacement costs. Loans may be a better option when an owner plans to use the same tools for a long time, or the items do not have frequent updates or maintenance requirements.
Management of Purchases
Many financing agencies offer asset management services that may include installation, condition evaluations, updates and equipment disposal.
Businesses depend on equipment to operate successfully. Obtaining new tools and items can ensure quality service, efficient operations, satisfied customers, and continued growth. Equipment financing enables companies to keep their organizations moving forward.