Encompassing broad segments such as manufacturing and construction, success in the industrial industry relies heavily on efficiency and in turn equipment.
Industrial equipment comes in various sizes and prices. With great use and ware and tare, the equipment needs to be maintained, replaced or updated frequently in order to maintain expansion and profitability.
As a business in need of a new $300,000 piece of equipment, there is a good chance this puts strains on the business bank account. A business may feel concerned about where and how they can obtain funds for such an expensive capital investment.
There are a few options available:
- Get a loan from a bank and purchase equipment in full
- Get a loan from a private lender
- Lease equipment from a private lender
Pros and Cons of each:
- Your local bank may accept you with open arms. Banks sometimes want collateral. Generally a bank takes weeks if not months to deliver a yes or no. Banks turn down 80% of businesses.
- A loan from a private lender will enable your business to purchase the capital equipment you need. The con is you own equipment asset in which the equipment may become outdated or obsolete at a date later down the road. A loan should not necessarily be used for equipment.
- Leasing equipment from a private lender and you pay monthly installments on a pre-determined term (general term period 12-60 months) instead of $300,000 at time of taking ownership of the equipment. At the end of the lease a business can return equipment for the latest technology or purchase the equipment for a $1 buy-out.
Innovative Lease Services, a private lender and provider of financial services to the industrial market since 1986, recommends businesses to utilize option 3, lease equipment from a private lender.
Equipment Leasing is more practical for small to medium sized businesses who do not have large financial backers. The private lender becomes a trustworthy financial support system, who provides funding when the business needs it.
Leasing equipment also allows businesses to strategically manage their cash flow. A business may be in need of equipment and hiring staff for a new project. To purchase the equipment it accounts for 80% of the businesses capital, 15% is accounted for hiring staff and costs associated with carryout the new project, and 5% capital remains. Instead of committing to purchasing the equipment and depleting the businesses capital, leasing allows the business to distribute cash flow smarter. Leasing your $300,000 piece of equipment now accounts for 15%, project accounts for 15%, 60% remains for additional projects or emergencies.
Additional benefits of Equipment Leasing includes:
- Low initial equipment expenses
- Tax deductions
- Lease new or used equipment $5K – $5M
- Easily upgrade equipment
ILS offers Additional Financial Programs:
- Customer Finance Programs for Manufacturers, Vendors, and Distributors of Capital Equipment
- Re-Financing for owned equipment (also referred to as Sale and Leaseback of Equipment)
Being able to afford equipment and run a successful business has never been easier. If your business is in the market for a new or used piece of industrial machinery or equipment, discover how Innovative Lease Services Industrial Equipment Leasing Program can help your business.