Why use an equipment financing and leasing company?

In today’s tough economic environment, many new businesses turn to a leasing and financing company when they need new equipment to run their business. When entrepreneurs start a new venture, there are many expenses associated with starting a business, such as leasing or purchasing business space, deposits required for utilities, phone and internet service, furnishings, business licenses , supplies, advertising, and employee wages.

These expenses, along with a plethora of unforeseen costs, require a large capital investment and sometimes don’t leave much money in the company’s coffers to cover the cost of the necessary equipment. When additional capital is needed, entrepreneurs must look for other options to obtain the equipment they need.

When expenses are over budget but equipment is still needed to run the business, equipment leasing or equipment financing can be very attractive. Equipment leasing is a great way for a new business to get the equipment they need without paying a lot of cash out of pocket. An added benefit of leasing is that equipment maintenance is often included in the monthly cost, eliminating the need to pay for a separate maintenance contract for the equipment. Leasing is also an excellent option for equipment that is needed only for a short period of time, as leases can be negotiated for varying lengths of time, with short-term and long-term leases often available. In the event that a business is unsuccessful, leases offer an option to return the equipment without negatively affecting the credit rating of the business.

When equipment will be needed long-term or permanently, equipment financing is often a more prudent option than leasing, as payments will be made over a period of a few years rather than ongoing. This is also a good option for businesses that have on-site maintenance personnel who can repair or maintain equipment. Financing allows a business to purchase necessary equipment while coming out of pocket with just a small down payment.

Financing is also an excellent option when a business is experiencing rapid growth and has an immediate need for more equipment, but does not have the capital to purchase it outright. When a company finances equipment, it becomes a company asset and adds to the company’s net worth. The financing team also has a benefit to the business in that the interest paid on the loan is often tax deductible.