The right equipment is crucial to our business success. Whether you require office furniture, printers, medical technology or commercial kitchen appliances, equipment financing can get your company off the ground or provide growth opportunities.
There are several things to consider before you borrow to fund your purchases. Consider these tips to help you choose the best option for your organization.
Plan Your Budget
Analyze your revenue and expenses, then set aside an amount to finance your needs. Having a plan for your money enables you to choose the best funding option for your business.
Choose a Financing Option
Decide whether you want a lease or a loan. With leasing, you pay monthly to use the equipment and return, renew or upgrade items at the end of the contract. Loans are a traditional commercial funding route. With this financing, a bank provides you with a lump sum of money to buy the products you require outright.
Find Terms To Fit Your Needs
Once you have chosen the equipment financing type that meets your needs, compare interest rates and terms to find what works best for your company. Consider whether your loan requires a down payment and asses added costs like closing fees or prepayment penalties. Leases can offer specialized terms for seasonal needs.
Keep Your Capital
With money set aside, you can save your working capital for day-to-day expenses. Preserving capital is an excellent benefit of leasing, as you do not have to put any money down.
Reduce Your Risk
If you fund your purchase with a loan, you will own all your equipment and assume all the financial risks associated with it, too. With a lease, the lender has the majority of the risk as they own the items.
Take Advantage of Upgrades
Your appliances will wear down with repeated use, resulting in efficiency and revenue loss over time. Leases provide the advantage of upgrades when needed.
Access Asset Management
Often, leasing companies offer services to keep track of factors that affect the equipment’s usefulness. This data gives them the optimal timeline for supplying upgrades and gives you the peace of mind knowing your items operate efficiently and require less maintenance.
Get the Latest and Greatest
Leases provide access to the newest technology, giving you an advantage in your industry.
Depending on the structure, this type of borrowing can have tax write-off opportunities.
There are various ways to structure your equipment financing to invest in necessary purchases. Finding the right option for your business can help you operate smoothly, save money, inspire growth and increase revenue.