There are benefits to both leasing and financing your company’s equipment needs. Your decision depends on the benefit of owning the equipment beyond the loan or lease period as well as your company’s financials. This is a critical consideration that deserves your time and attention, but you have a business to run. So, we put together high-level view to save you some time.
When you lease equipment, there’s usually no money down and no risk to your assets. Typically, it’s easier to get a lease, and you’ll probably have an option to buy at the end of the leasing period. If you decide to purchase leased equipment, you pay the difference between the lease price and how much the equipment is worth. Alternately, there may be a price set up when you negotiate the lease.
Leasing is a good option if you don’t have a sizable down payment for the equipment you need, or it’s likely to become obsolete before the lease is over. If you decide to buy at the end of the lease, equipment financing is still an option.
Equipment financing is a type of business loan. So, you may need to put together a down payment for a percentage of the total cost. When you finance, the lender may place a lien against your business as collateral for the money lent. However, equipment financing has several advantages. First, it doesn’t require a lump sum payment, you receive the title to the equipment when the loan is paid, and it can improve your business’s credit rating.
When you finance equipment, you own it after it’s paid off. So, make sure to choose equipment with a long useful life that won’t become obsolete. If you have the minimum down payment and the equipment can be used for a long time, choosing a loan could be your best bet.
Choosing to finance equipment makes sense for large and small businesses alike. It provides a way to enjoy the perks of ownership, without requiring a huge outlay of cash. This means your cash flow will not be tied up, but will instead be available for operating costs and other capital needs.
Whether you need to buy forklifts or industrial kitchen equipment, financing makes it possible to grow your business while controlling current costs. Financing technology that is likely to become obsolete is a great strategy to keep cash available when the time comes for upgrades. This strategic thinking can give your business the competitive edge it needs.
Find out how financing improves cash flow, hedges against inflation, simplifies equipment upgrades and more. If you have questions about how equipment financing can benefit your business, call us today at MY Company Funding for more information.