Equipment Leasing And Financing
In Today’s World
Do You Need New Equipment For Your Business?
- Need new equipment but struggling to find the cash to pay for it?
- Maybe securing a loan with your Bank isn’t presently an option?
- Maybe you are a start-up and don’t meet the banks requirements?
- Maybe you don’t have a deposit to put down for a loan?
If so, equipment leasing and financing maybe the answer for you and your business.
No matter what the current economic environment is, it is estimated that 80% of start up and existing businesses turn to equipment leasing and financing companies when they need new equipment.
There are many expenses associated with starting a company, such as renting office space, utilities that require deposits, telephone and internet service contracts, office furnishings, various business licensing costs, equipment supplies, marketing and salaries etc. It’s a time when working capital can be quickly diminished.
Using up one’s capital budget at the outset will put great stress on a companies cash flow & working capital. This is when most savvy entrepreneurs turn to fiscally shrewd options to get the equipment they need to make their businesses flourish.
Why Lease Finance Your Equipment?
Equipment leasing is the best way for a start up business to get the equipment it needs without putting undue financial pressures on its working capital. It offers a world of flexibility that standard banking services just cannot match.
It is no surprise therefore that an estimated 8 out of 10 U.S. companies now lease some or all of their capital equipment. Leasing is powerful. It offers greater financial options, flexibility & benefits.
Types Of Equipment Leasing And Financing Programs
Finance 100% of any capital purchase including soft costs like maintenance and installation.
No Financials – Application Only:
Get credit approved for equipment purchases up to $100,000.00 using a one page application and no financials
Equipment Line of Credit:
Get pre-approved for an equipment line of credit to be drawn upon at your convenience.
Need to put money back into your operating account? Get cash to use for any business purpose, by borrowing against the equipment you already own as collateral.
Master & Seasonal Lease Programs:
If you have a seasonal business, and only operate 7 months a year, lease payments can be set up for the same time period. Master leases are similar to equipment lines of credit.
Benefits of Equipment Leasing
- Budgeting – Equipment lease finance arrangements can be negotiated for variable amounts of time, both short and long-term, which means the business owner can tailor ‘payback periods’ and monthly payments to accommodate his/her business’s particular cash flow abilities.
- Control – Standard Bank loans and facilities can be very restrictive in nature and sometimes shackle the growth of a business, as opposed to equipment leasing & financing that gives a Business Owner greater financial flexibility and puts them in more control.
- Growth – When a business experiences fast growth that requires an immediate fulfilment of equipment but does not have the necessary working capital to make the purchase, lease finance is the fastest and most flexible option.
- Accounting – Leasing payments can be entered as ‘footnote items’ on a companies balance sheet and in most cases does not increase a companies ‘booked’ liabilities unlike a standard loan.
- Credit – Leasing can leave a companies credit line with their Bank untouched allowing them to enter into other necessary credit facilities
- Approval – In many cases, an equipment lease can be completed when conventional Banking and financing may not be possible.
- Assets – Any equipment that is financed becomes an immediate asset of the company, adding to the company’s net worth.
- Tax – Equipment lease finance has very beneficial Tax benefits associated with it.
Tax Deduction for Equipment Purchases
Section 179 of the IRS tax code gives businesses the opportunity to deduct the FULL purchase price of qualifying new and used equipment and software placed into service during the tax year they were purchased or financed.
This tax break encourages small businesses to invest in themselves and to purchase equipment sooner rather than later. There are some limits, however, to the amount that can be written off. ($500,000 in 2016) The section 179 deductions decrease dollar for dollar on purchases over $2 million.
After the Section 179 tax deductions are exhausted, bonus depreciation of 50% can be taken on the remaining amount of equipment placed into service. Use the Section 179 Tax Deduction Calculator to help determine your Section 179 write off amount and the tax savings it might generate for you. (Source: Leasitcorp.com)
Equipment Leasing And Financing Companies
Picking an equipment leasing company is not as difficult as one may think. However, you should find one that has been assisting companies similar to yours for many years. One that understands your needs and your financial desires. Most importantly one who exhibits professional and good moral character.
Once you find that company they will be able to help you determine how you can best use equipment leasing to save on future capital expenses, free up cash, overcome budget limitations and also enjoy potential tax benefits. Having this type of understanding will help you budget and grow your business through all future economic cycles.