Equipment Financing Can Give Your Business More Flexible Cash Flow
Heavy equipment and the latest technology can be a huge drain on your company’s financing. If your business is looking for a cost-effective say to take on new projects, streamline your current services or replace a damaged piece of equipment, consider how equipment financing can help. Don’t empty your working capital into a major expense, but keep your cash flow flexible and responsive to any situation that may arise.
Equipment can be financed in two basic ways. You can use financing to purchase equipment outright or choose to lease equipment. Depending on the type of equipment and your financial situation, there are pros and cons to each financial option.
An equipment loan allows you to own your equipment outright. This means that any repairs are your responsibility, but you can also use it however you wish without worrying about damaging equipment that belongs to your lender. If you’re planning on using the same equipment over a long period, a loan will save you money compared to a lease.
Leasing equipment, however, can offer you far more flexibility and prevent the effects of obsolete equipment. First, most leases require no down payment, so you can get started right away with your new service or replace your outdated equipment. A lease can have a wide range of term lengths, so you can choose to lease a specialized piece of equipment for a short-term project.
Once your lease has ended, you have three basic options. First, you can simply end the lease and move on to another project with a different type of equipment. Next, you can decide to purchase the equipment at the end of the lease. You may pay slightly more than a traditional equipment loan, but you’ll receive a discount for purchasing the same equipment you leased. Finally, a lease allows you to upgrade at the end of the term. If you’re looking for equipment that routinely becomes obsolete, a lease can prevent the cost of purchasing goods that quickly depreciate. Computers and medical technology are costly, but can become outdated in as little as a year. Simply lease this equipment for a year, then sign on with the latest model for the next year.
Equipment financing, either loans or leases, is available for small businesses in nearly any industry. Learn more about these flexible financial solutions and avoid spending all your working capital on a single piece of machinery.