As a small business owner, you understand the costs associated with running your company, and you have probably considered most every idea for cutting those costs. However, have you looked into the benefits of equipment leasing?
Easier Approval Process
Most small business loans require a specific business and personal credit score as well as a certain longevity. Many leasing companies do not have such strict requirements, but you may want to do some research to find your best option for approval.
In addition, it can take a bank or other financial institution months to approve your loan and get you the money you need to purchase your equipment. However, it often only takes a few days to apply for and gain leasing approval. This means that your equipment is delivered and set up quickly.
When you lease your machinery, you don’t typically have to pay a large down payment. Also, your payments tend to be less than financed equipment. Because your outlay is lower and spread out over time, you should be able to better manage your working capital. This is especially important if your business is in a growth stage.
Today’s technology changes so quickly that your equipment can be outdated by the time it is installed in your facility. However, a lease allows you to regularly update or upgrade your equipment. When your lease ends, you can either return or purchase the machinery, or you can sign a new lease on the newest piece of equipment available, one with all the bells and whistles available. Leasing prevents your assets from becoming obsolete.
When you purchase equipment, you either pay in full out of your cash flows or you finance the equipment. When you finance it, you need to make regular monthly payments. You may even need to provide collateral.
However, leased equipment doesn’t typically require collateral. In addition, you can negotiate your payments. For example, you may choose to make your lease payments weekly, monthly, quarterly or yearly.
In addition, you can add equipment easily during your growth phases.
Unlike your purchased equipment, which needs to be depreciated over time on your taxes, your lease payments may be fully deductible. Because you are not purchasing an asset that will belong to your company, you can often take your lease payments off on your taxes as an operational expense.
As you grow your company, research all the benefits of equipment leasing.