Owning a business comes with large responsibilities to ensure it remains operational and on a successful track. When equipment becomes outdated or is no longer functioning properly, it can slow down or completely stop your company’s growth. To prevent this hangup with your business it is important to keep your equipment up to date. While new equipment often holds a high price tag, equipment financing can offer you an affordable way to keep up to date.
What is Equipment Financing?
Equipment financing is a great way to purchase or lease equipment with affordable monthly payment options. Rather than dumping all of your businesses savings into a loan purchase you can use an equipment loan or leasing option.
Equipment loans are a great option for many growing businesses as it breaks up the purchase amount of the equipment into affordable monthly payments. Most equipment loans have low interest rates with a fixed repayment term. The lender holds a lien on the equipment, failure to repay the loan could result in equipment repossession. At the end of the loan term, when paid in full, the lien is removed and your company has full ownership of the equipment.
Equipment leasing is an option used by many business owners because the monthly lease payment is often tax deductible. With a low down payment your business can lease equipment, making affordable monthly payments. Your business does not own the equipment, at the end of the lease term you must return the equipment. There is an option to purchase the equipment at the end of the lease at a discounted rate. However many businesses will opt to begin a new lease on more up to date equipment at this time.
Which Equipment Financing Option is Right For Your Business
Depending on your business’s long term needs a loan or a lease could both be beneficial to you. While the lease payments are often tax deductible you do not own the equipment and are paying to essentially rent to the equipment. When using a loan you are purchasing the equipment, this creates an asset for your business. Before financing equipment it is important to look at the big picture, your expectations and then determine which equipment financing option is best for your business.
Chris Fuller went to the University of South Florida and has worked in the financial sector for over 20 years. He has extensive experience in all aspects of personal and small business lending, from personal loans, equipment finance to cash flow based solutions for small mom and pop businesses, and large corporations.