Every Way Equipment Financing Can Benefit Business
When your company is ready to expand, you need to understand the financial tools available to you and the ways they are designed to help your business flourish. Many beginning entrepreneurs shy away from products like leases and loans, viewing the month-to-month overhead as disadvantageous when compared to a one-time cash outlay. The fact is, saving for the major expense that is buying new equipment can be time-consuming. It can also distract you from making moves that would expand your volume of business and help you increase your market share. To have money open to make those moves, you need to plan to have a controlled overhead that includes equipment financing.
There are many ways to finance equipment, including leases. Leasing your machines can be very advantageous when you work in an industry that has frequent technological upgrades, machines with short life cycles, or other forms of planned obsolescence. Your financing company can work with you to plan upgrades, to handle the installation of new equipment and the disposal of old ones, and to adjust your lease so you always have top of the line machines for your work, no matter what industry you are in.
Another form of financing that many companies take advantage of is the SBA loan. Equipment financing through the Small Business Administration is a path to ownership, and it works well for machines that will have a long operating life, like heavy industrial equipment. The SBA provides advantageous terms and low interest rates, so your overhead is well-controlled and you can focus on reinvesting your profits in your business until you are ready to reap a return on your investment.
The last form of equipment financing that can benefit your business is the leaseback. If you need working capital and you don’t want to increase your company’s debt, you can work with a financing company to sell equipment you own outright for the equity in it. The company then arranges a lease agreement with the buyer, who allows you to retain it for use. This can be particularly helpful if you’re looking to move into the advantages of a lease and you want working capital to put to use elsewhere in your business, and it can start the upgrade cycle.
Financing equipment comes with both tax advantages and strategic advantages that will help keep your company competitive. It’s almost always a far better choice than depleting your reserve funds and working capital to purchase equipment, because it leaves that working capital intact so you can move on opportunities as they arise.