Equipment financing enables your business to obtain necessary tools, technology and machinery while maintaining adequate cash flow for operational expenses.
Some of the many advantages of this specific type of funding include:
Straightforward Application Process
If you have strong credit scores, the application for an equipment loan should be relatively quick, depending on the purchase’s size. Costly items require additional information, but these specific-use loans still fund quicker than traditional financing. Leasing has a simple application process and does not have as many requirements as a loan.
Borrowing gives you the ability to fund everything at once. You do not need a down payment to secure an equipment lease. Leasing typically also includes installation, training, maintenance, repair and upgrade services.
Increased Buying Power
Borrowing in this way allows you to acquire better items than you could with your existing capital, providing you with the ability to remain competitive in your industry.
You can create a funding solution that meets your unique needs and budget. A lease has more customizable options than a loan.
This kind of funding has regular monthly payments, enabling you to plan and prepare accurate budgets and forecasts.
Enhanced Cash Flow
When you finance your needed items, you increase your working capital, allowing you to maintain daily operating expenses and have money on hand for unforeseen events.
Reserved Lines of Credit
When you use equipment financing to fund your purchases, you keep your other credit lines available for alternative business expenses. For this purpose, loans are specific to purchasing needed materials and tools, leaving different loan options free for your future use. With this type of funding, the equipment itself serves as collateral, meaning you do not have to risk your assets to secure the money.
Possible Tax Deductions
You may also benefit from potential tax advantages. With financing, you make payments to the lender, with interest, over the course of the agreement. You can write off the interest when you file taxes.
Leases have more significant tax benefits than loans, as you can usually write off the entire monthly payment as a business expense. There are also incentives with leasing written into the tax code stating that the full amount of equipment leases is tax-deductible, even if you do not pay the entire amount during the year.
There is no question you need adequate tools to operate your business successfully. Taking advantage of available equipment financing options can benefit your company in many ways.