As the owner of a business, you’ve got a lot of things to keep track of – and they all seem to dig deep into your cash flow. Sometimes, it seems like after the rest of the overhead is accounted for, you don’t have much left for business operations. Specifically, for the equipment, you need to facilitate profitability. This is where equipment leasing comes into play. With its superior purchase capacity when compared to buying everything for purposes of ownership.
How to Obtain an Equipment Lease
First of all, let us make the proper distinction between equipment financing and equipment leasing:
When you finance equipment, you are taking out a loan from a bank or other lender. You use this to purchase the equipment in full, and then pay the interest on the funds to the bank over some time. It’s yours, and you can make changes to the machinery if you like.
When you lease equipment, on the other hand, you do not own the machinery. Not even when the lease term concludes. You pay interest and administrative fees during the time you use it, which will be much less money than buying it at once; especially since you can use a portion of the profits from using the equipment to pay the interest+fees. You cannot make changes to the equipment.
Advantages to Leasing Over Owning
The primary advantage has already been elucidated: the money you save. As a cash-strapped small business, the ability to lease is a big improvement to your cash flow than buying the whole thing outright. There’s no big downpayment, there are tax credits available for leasing, and you can upgrade much more easily (less costly) than if you had bought the equipment. Overall, the cost/benefit analysis works heavily in favor of small businesses when it comes to equipment leasing.
Contact 18 Sierra Financial for more information today.