All You Need to Know About Equipment Financing
Many types of businesses require specialized equipment to complete projects and boost profits. For instance, construction companies need cement mixers, cranes, bulldozers, jackhammers, and other costly machinery. Businesses have the option of purchasing needed equipment or leasing it. Here are some of the advantages of equipment financing through leasing.
When you buy equipment, you typically have to make a large down payment, and you are also responsible for maintenance and repairs. Leasing equipment involves less of an upfront cost, and repairs and maintenance are often included in the leasing agreement. If rental payments are problematic for your company, factoring is a possibility. Factoring your accounts receivables allows you quick access to equipment financing through leasing based upon the value of your invoices.
Use Cutting-Edge Equipment
Buying equipment forces you to continue using it even when updated models have appeared on the market. Your investment in the purchase precludes frequent upgrades. However, when you lease machinery, you have access to the latest equipment, and whenever you renew your lease, you can upgrade to cutting-edge models.
Avoid a Lengthy Commitment
Equipment financing through leasing gives you access to specialized machinery when you need it. Some equipment you only require periodically for special jobs or seasonal work. Rather than buy these items and have them sit idle much of the time, it makes sense to lease them only for as long as necessary.
Don’t Risk Your Credit
If your company is new and has not yet established good business credit, a traditional bank loan to purchase equipment may not be open to you. When you lease equipment, your company’s credit is not a major deciding factor. Equipment leasing companies are typically willing to rent machinery to you if you make a deposit and demonstrate that your company can handle the payments punctually.
For more advice on equipment financing, contact us at Royalty Business Lending.