What Is Equipment Leasing?
Business equipment leasing is the processing of getting the use of workstations, business machinery and different sorts of equipments by a rental agreement. By getting into a contract to use equipment for a selected period of time, a business can enjoy the advantages of using the equipment without the responsibility of possession. Getting an equipment lease is helpful for your business when the requirement of that particular equipment is temporary.
How Equipment Leasing Can Help Your Business?
Many business industries use equipment leasing. Sometimes, choosing to lease important equipment and some other gears is a really perfect situation for both new and established businesses with diminutive working capital. Rather than investing large amount of limited resources on the purchase of required equipment, leasing the required gears makes it possible to get updated equipment and focus on the growth of your business.
There are different advantages related to business equipment leasing. And among them one has to do with the paying of taxes. As the equipment is only leased and not purchased, the business isn’t liable for taxes on the equipment.
It is important to answer following questions before starting the leasing process;
What Is Your Monthly Revenue?
Equipment leasing offers extensively lower monthly payments as compared to purchasing the equipment. However it still needs to be factored in your cash flow.
How Long The Equipment Will Be Used?
For short-term use of equipment, leasing is sort of cost-effective and best approach for businesses. However if you need to use the equipment for more than three years, an equipment loan or line of credit can be useful than leasing.
How Quickly The Equipment Will Become Outdated?
At present the technology is changing almost every day and the equipments and gadgets become outdated quickly. It is also recommended to consider this factor before deciding whether trade-in is a good option for you.
How It Works?
Business equipment leasing is also a simple approach to get the latest equipment. Lots of lease agreements include conditions that allow obsolete equipment to be exchanged with updated equipment. This can be advantageous when a business excrescences the capacity of an older lease equipment and needs something more effective to continue with business growth.
Are you looking for equipment for your new business? Whether you need desks, machinery, computers, or a vehicle, you need to make best cost effective decisions for purchasing. Why not consider leasing business equipment rather than purchasing?
Below mentioned information can help you come to a decision if leasing is the appropriate option for you.
What Are The Advantages?
There are many advantages of equipment leasing:
- Leasing can prevent you from wasting time and difficulty involved in locating someone who will give you credit for equipment purchase.
- You can keep the pace with emerging technology.
- With short-term equipment lease, you can evaluate whether the equipment fits your requirements.
- Equipment maintenance may be included in the lease, saving you additional expenses.
- In case you use the leased resource in your business, you can have a tax advantage as the lease payments are absolutely tax deductible.
What Are The Factors To Consider When Leasing Equipment?
There are many factors to consider when leasing equipment. Here are a couple of considerations:
- In case you need the equipment for longer term and looking to set up equity in it, you need to settle a purchase option under which a part of your lease payments is credited to the acquisition price.
- To avoid any legal consequence, it is recommended to do some homework before applying.
Why Equipment Leasing Is A Preferred Option?
Business equipment leasing is a well-known financing option for companies of every size. This leasing program can help businesses to get the latest business equipment for their business production. As the leasing does not require a substantial down payment, you can hold on to your cash and invest it in other regions of your business.
BENEFITS OF BUSINESS EQUIPMENT LEASING
Improves Cash Flow
When you finance your business equipment, your money is not tied up in the equipment. Instead, it is free for other business investments that will help develop your business, make money, and make sure the equipment you acquire makes profits.
Save Other Lines Of Credit
You don’t know may be you will have many opportunities in the future. Leasing equipment indicates that you have credit available for future opportunities.
Provides 100% Financing
Even soft costs, which include shipments, installation, and maintenance contracts, can normally be blanketed. Therefore you can understand that these related expenses will not disturb your business cash flow.
Simplifies Equipment Changes
Recruiting more workers? Increasing performance or productivity? Additional equipment can be added to your present lease or loan. Or, in case you’re trying to stay ahead of your competition by staying ahead of latest technology in equipments, the equity in equipment can be applied toward the loan or lease of new business equipment.
Remove Hidden Costs
With business equipment leasing, you have no closing costs, no compensating balances, and no blanket liens or different off-putting agreements that usually banking institutions use to increase customers’ cost.
100% of your payments can be tax deductible based on the type of lease you choose.
In the end, before going any further, you need to decide on whether to lease or purchase equipment. In case your requirements for the equipment are small and you have the cash then just purchase it. However, in case you require a considerable amount of equipment for your business, such as production machinery, leasing may be a good option. After all, why tie up large amounts especially when you can use that cash in the growth of your business? Select the equipment you need to extend your business and Merchant Advisors will provide you with the funding.