Acquiring new equipment to start your small business can be very expensive. However, thanks to equipment leasing companies, entrepreneurs have an easier time turning their visions into reality.
Equipment leasing essentially refers to a business renting the equipment they need from a provider. Like equipment financing, it’s an ideal method for small businesses to get started. According to the Equipment Leasing Association, approximately 80 percent of businesses in America lease their capital equipment. Even hospitals and healthcare providers lease their medical equipment.
Find out how this can help your small business, what challenges you can expect and some important questions you need to address when leasing equipment.
Benefits to Equipment Leasing
The following are the main benefits of equipment leasing for small businesses. But these benefits are only the tip of the iceberg – as there are many more depending on your industry and needs.
- No Down Payment
Small businesses can run into cash problems early on because they much of their money on equipment down payments. Oftentimes, equipment leasing has no such requirement, allowing you to spend your resources on other things that your business needs.
- More Credit
You may be considering taking out a loan specifically to purchase equipment, but these can take up a lot of your available credit. Equipment leasing is not a loan and can be taken down as a business expense on your taxes. This means you can spend your credit on other endeavors.
- Easy Upgrading
Another downside of buying equipment is that it can quickly become obsolete, leaving you with a burden rather than an advantage. With equipment leases, you switch to more updated equipment at the end of the lease without spending more money on outdated machinery.
Challenges to Equipment Leasing
Equipment leasing does come with a few responsibilities to keep in mind, notably the following:
- Leasing Periods
Depending on the terms of your lease, you can use the equipment for months or even years. This can be a problem if your small business is in a highly competitive and quickly evolving field. Negotiate the terms of your lease with the provider if you think this could become a problem so you don’t get stuck with outdated equipment.
- Longer Payments
Equipment leasing can be affordable when you look at it on a monthly basis, but the cumulative amount you spend could be higher than if you paid for the equipment outright.
Important Considerations for Equipment Leasing
Before you sign an equipment leasing contract, here are a few important things you need to examine.
- What’s Your Industry Like?
Depending on your industry, the most efficient equipment for your business can change quickly. Purchasing quickly outdated equipment can be a costly blunder, which means leasing is your best option.
- How Small is Your Company?
If your small business only needs a single computer or one piece of machinery, you may be better off buying it. Leasing is the better option if you need more than one piece of hardware and your resources are stretched enough already.
- Will You Purchase the Equipment at the End?
Some leasing contracts allow you to purchase the machinery at the end of the term. If your small business works in a field that doesn’t change its equipment quickly, this is a good move for securing reliable machinery.
Equipment leasing is just one way you can streamline the operations of your small business. Another way you can do so is by partnering with a reliable equipment financing firm, so you can purchase machinery easily.
Experienced Financial Partner
Regents Capital fast-growing independent company focusing on equipment financing for a wide range of businesses. Thanks to their savvy business practices and great company culture, Regents Capital has experienced an average year-over-year growth of 35 percent.
Contact us today and form a reliable partnership to help your business grow!