5 Reasons to Consider Equipment Financing over Purchasing

Finance & Accounting

Should your business finance or purchase your next equipment need? Here are 5 situations in which you should use financing.

    • Your business is short on cash flow. Financing means your business pays a lower initial expense/cost. Equipment Financing does not always require a down payment, therefore you can acquire a new asset paying a monthly fixed cost in place of paying thousands of dollars for a new piece of equipment at the time of purchase. It is also very common for the financing monthly payment to be lower than loan monthly payments to a bank.

  • Your business needs new equipment frequently or you like to have the newest makes and models. If you only plan on keeping equipment for a short term, financing makes more sense. Reselling used equipment when you no longer need it will most likely result in a loss of equity. Upgrading to new equipment every few years is easy with financing. If equipment becomes obsolete, technology evolves, or you simply do not like what you purchased, you have not vested all equity into one item that no longer gets the job done. At the end of your term trade in your financed equipment for new makes and models.
  • Immediate tax deductions. A financed piece of equipment can be deducted as a business expense in full on your tax return, which therefore reduces the cost of your lease within that same calendar year. Your business does not have to wait until the equipment’s finance terms are completed to write off the truck’s amount.
  • Flexible terms. Equipment financing is easy to acquire with us and we have extremely flexible terms. Whether you have good or bad credit or haven’t been in business for very long we can work out a mutually beneficial payment schedule.
  • You need equipment now. Financing is faster than traditional bank loans. In case your business is relying on purchasing equipment with the help of a bank loan, you are at the mercy of the bank’s agenda and available funds. With financing, applying and getting approved can happen as fast as one business day.

In case your business is not feeling one of the situations above it is still important to approximate the net cost of any large future business equipment purchase. Consider the piece of equipment’s cost, tax, depreciation, business use and lifespan, and resale value. If you find that the cost of the equipment outweighs the asset’s predicted incoming revenue, financing will indeed cost you less.

Ultimately financing saves you money. If you are short on business capital or know you will have additional business costs within the next few months, financing will allow you to get your equipment and avoid short term financial mishaps. If your business is just starting out, investing a lot of capital into new equipment can place a burden on your cash flow and obstruct growth.

To apply for Equipment Financing, get started here.