Many companies find that they need to set aside funds to buy equipment as they grow. However, it can be difficult to make such concessions, especially in these economic times. Why put your operating budget in the red by assuming additional financing, when it is far more advantageous to secure one of the many leasing programs that equipment brokers offer to get the equipment you need today?

Financing vs. Lease

For established businesses, those that have been operating successfully for at least two years, obtaining financing to make equipment purchases can be a difficult prospect to face. With rising interest rates, banks and loan companies may require the signing of additional collateral to secure the loan, or even enforce such loans with a short-term note that will have to be repaid with fees in less time. than business. you can pay.

Leasing programs, on the other hand, are much more flexible and can be tailored to the exact needs of the business. Not all equipment purchases are meant to be long-term and may only be needed for a limited period of time. Financing through lending agencies in these circumstances would be less than efficient, because once the loan is repaid, you remain the owner of the equipment and reselling it once it is no longer needed will not return the initial investment. With equipment leasing, you can easily add clauses that cover the return of unnecessary equipment, sometimes with a financial bonus for your business.

Types of equipment leases available

For those looking to get only the use of the necessary equipment in the short term, there are two programs that can be used to your advantage. The first, known as an operating lease, allows a business to lease the necessary equipment for the exact time it needs it, at an affordable price. Once it is no longer needed, it can easily be returned to the leasing agent for a small fee. The second, known as a master lease, allows the company to test the equipment it was planning to buy for a specified period of time, without any transfer of ownership. At the end of the initial lease, they have the option to extend that lease, without having to renegotiate.

For those interested in actually purchasing the equipment but do not want to tie up working capital in commercial financing, capital leasing is probably the best leasing option available. Equipment is purchased through a lease with affordable monthly payments and at the end of the contract, a final payment secures ownership and transfers ownership rights. However, for tax purposes, the equipment is considered to have already been purchased during that fiscal year and any tax exemption for making such a purchase may apply, although the final payment for the equipment may take a year or more.

A lease that really pays you money

For forward-looking business owners, they may already have assigned equipment that they would like to sell, but cannot do so until the operations surrounding them have concluded. Typically this would mean taking out a loan to finance the start of future operation, including the purchase of new equipment. With one type of sale-lease-back lease programs, business owners can sell future unwanted equipment to a broker, for a full negotiated purchase price, and then temporarily lease it at an affordable price. This gives them the use of the equipment while they need it, plus the cash flow they need to start the new operation. At the end of the term, the rider takes possession of the sold equipment.