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Equipment Leasing

Successfully running a small or medium-sized business is no small feat.

There are expenses to take care of and emergencies to worry about. But did you know there are several equipment finance solutions? While there are numerous equipment financing options, equipment leasing is a great option and allows you to focus on your company’s future. Equipment leasing allows you to acquire equipment for a business without having to purchase it. The business pays small monthly payments for a specified period. At the end of the lease, you have the option to either purchase or return the equipment.

So, why is it important? Businesses spend exorbitant amounts of cash buying industrial machines and other items. Business needs equipment and leasing allows you to finance other, potentially more important sectors allowing your company to get to the next level.

Equipment Financing

What is it? It is a fast way for businesses to purchase vital equipment necessary for business operation without making a substantial dent in your budget. It is simple and often a great substitution for leasing. Acquiring the loan is often easy and simple. Moreover, the items purchased can be used to secure the loan. Bear in mind that this type of funding is specifically designed for financing equipment. Is leasing good for you? Here are ways to grow your business with equipment leasing.

1. Stay current/Easy to upgrade

Regardless of the type of business your own, it is imperative to stay on top of the most recent advances in technology. Staying updated gives your company a competitive edge. Today, businesses always find themselves in need of constant equipment upgrades. How long do you intend to lease equipment? When you lease items for a short term, after the lease is up, you can opt to upgrade to a recent version. When you purchase equipment, you are stuck with it and making upgrades is difficult and expensive. It makes financial sense to lease equipment since you can return obsolete equipment at the end of the lease. In fact, there are occasions when you can trade outdated equipment in the middle of a lease for upgraded versions.

2. Tax incentives

The current Section 179 of the US tax code has set a tax deduction limit of $500,000.do your due diligence and find out if the equipment you need is eligible. If so, don’t hesitate to take advantage of the set deduction limits. You will be surprised to find that all the equipment cost can be deducted from taxable income. Therefore, take the initiative to consult a tax adviser or your accountant and understand the potential tax benefits.

3. You can lease almost any equipment

Chances are, the catering equipment in your favorite restaurant is on a finance lease. High-performing industrial machinery, office furniture, commercial vehicles, printing equipment – it’s almost limitless what you can acquire on a lease and you can get to choose the equipment you need. Your business will no longer have to worry about how to get expensive equipment.

4. Immediate access

Rather than having to wait for a loan approval or adequate profit, leasing equipment means that you can have your items within a few days. Moreover, you are likely to get quality equipment than you might otherwise be able to purchase with your savings. You don’t have to sacrifice on other business operations while waiting to find extra money.

5. Not a fixed asset

Leased items are not yours, and you are not obligated to purchase them after your contract ends. What does this mean for your business? It’s simple, there is less documentation and your assets will not become obsolete. Equipment can be returned as well as upgraded.

6. Attractive balance sheet

Monthly lease payments are considered as company expenses and are therefore not viewed as a long-term debt/loan. And reducing debts on your financial statements makes it easier to secure business funding.

7. Conserve and control budget

Every company’s goal is to reduce cash outlay. Leasing is not only good for future budgeting but also reduces your working capital. Predicted monthly expenses allow you to focus on daily company expenses, business expansion, free up other finance options and develop long-term plans. When financing equipment, always remember that cash flow availability is crucial to success.

8. Easy approval process

An application to lease equipment is usually approved with the requirement of a large down payment, collateral or a high credit score. Plus you don’t have to submit a business plan or deal with a bunch of paperwork. In other words, a lease has few hustles compared to equipment financing or a bank loan. You get to avoid long wait lists and strict requirements.

9. Increase flexibility

Your business will grow and change, and so will your needs. With leasing, a business has the option to take change, upgrade or take on additional equipment. Leasing also is associated with easy maintenance. Sometimes, the finance company will go as far as paying for repairs. When leasing you can choose the equipment you need without worrying about purchasing equipment.

10. Healthy business credit

It is imperative to keep the company’s credit line healthy. Leasing equipment keeps available credit line open for short-term financing and operations. A healthy business credit strengthens a company’s cash flow allowing real-time response during a time of need.

Finance lease or operating lease?

Essentially, there are two primary types of equipment Leases, the finance and the operating lease. The operating lease is provided by a lessor to allow a business to use equipment for a certain period without ownership. Equipment acquired under an operating lease is accounted for as an expense and cannot be listed as capital. Finance lease also referred to as capital lease, is similar to the operation lease but differs in that the leased equipment is reported as an asset. This increases the business’ liabilities as well as its holdings.

When researching equipment finance solutions, always weigh your options carefully. Leases can be considered a flexible finance solution and works for new, small, medium-sized, large and established businesses. Get started with CPN Numbers where every financial solution is tailor-fit along with many other products to serve all your business equipment needs.