Equipment leasing can offer a superior position to buy – especially in certain industries such as construction and healthcare/medical, where the equipment is of notoriously high costs. These costs aren’t relegated to those industries, of course, and if you’re a business owner looking to preserve your cash flow, leasing might be the way to go. It certainly offers superior benefits in some areas.
The Process
The process of obtaining an equipment lease is similar to that of any loan; you first find a vendor and then request or download the relevant agreement form. It will tell you the intended term length, the total cost, the monthly payments and any admin fees (the latter will be minimal if it exists). The equipment will be your responsibility until the lease term concludes, after which you can simply buy the equipment – sans any degradation as determined by the market rate. There are even tax deductions that you can make on the equipment lease payments.
What Advantages are Conferred By Equipment Leasing?
There is, of course, the obvious advantage of not having to pay the hefty amount necessary to own the equipment outright. Most of the vendors/equipment owners that you’ll find won’t ask for a large down payment. This is a significant benefit to your actual business, since you don’t have to compromise your cash flow for essential equipment.
Another advantage that leasing has over buying is the issue of age. Although aging machinery is an issue in all industries; there are some in which is significantly more relevant. With equipment leasing, you can upgrade much more cost-effectively than if you had bought it outright.
As hinted at earlier, there are IRS tax credits available with the leasing of equipment. In particular, Section 179 Qualified Financing of the tax code deals with the deductions that may be applicable to this aspect of your business expenses.
This is just one of many finance-related topics that Fortis Funding deals with to help small-to-medium-sized businesses. Contact us today to start exploring your financing options.