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Benefits of Financing

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The Benefits of Equipment Financing

Equipment financing provides an excellent alternative source of capital and a flexible alternative to cash in the acquisition of business-critical assets and equipment. Equipment financing is an easy, economical way for businesses of any size to acquire equipment. The benefits are abundant, and the process is simple.

Given today’s economic climate and the rapid pace of technological obsolescence, more than 80% of all U.S. companies utilize some form of equipment financing according to the Equipment Leasing and Finance Association reports. Equipment financing allows companies to procure equipment, without having to purchase the equipment with cash or working capital.

Leasing vs Buying

Leasing Equipment

While there is an appeal to owning your equipment, leasing can free up significant capital for small business owners. According to a recent U.S. Equipment Finance Market Study, 39% of businesses that acquired new equipment leased, compared to 17% in years prior. Leasing equipment frees up cash for other financial needs of growing companies. Leasing permits you to avoid many of the uncertainties associated with equipment ownership and instead allows you to focus on using the equipment or assets to run and grow your business.

  • Low to no down payments
  • Lower payments than equipment finance loans
  • Tax Deductions, Payments usually fully tax deductible
  • Easier to qualify than a bank loan

Buying Equipment

Ownership and tax breaks make buying business equipment attractive, but high initial costs mean this option isn’t for everyone. After making the last payment on your term, you own the equipment. The equipment must be shown as an asset and depreciated – which means the payments are not fully tax deductible.

  • Typically, a larger down payment up front
  • Tax deductions, Section 179, allows you to fully deduct the cost of some newly purchased assets in the first year
  • Purchasing your own equipment, you’ll be able to decide exactly which brand and model you get. No need to adapt to any leasing company requirements.
  • When looking at highly reputable brands, resale value can allow companies to resell the equipment and recoup most of their upfront expenses.

Working Capital

With working capital loans increasingly more available for small and medium size businesses achieving your business targets has become easier. There are many benefits your business stands to gain from working capital finance.

As your business grows, its financial requirements also increase. While revenues may increase during the seasons for most businesses, it is also likely to suffer during slower periods. This can pose a threat to maintaining stable operations on a monthly basis. You can use Working Capital Loan for such situations.

Fuels short-term needs: Working capital loans are easy to secure and help you meet short-term requirements. They also have flexible repayment tenors to help you plan your payments better too.

Eliminates collateral: The biggest advantage of working capital loans is that they are unsecured. For most loans, pledging collateral is essential as it acts as an assurance of repayment. However, this isn’t ideal as it puts your business assets and personal valuables at risk. Working capital loans save you from this hassle.

You can easily apply for a working capital loan online and will have to submit only a few documents. As a result, the process is simple for you and funds are disbursed faster. Working capital financing helps maintain good cash flow for your business.