Equipment financing is a loan option for small business owners looking to purchase new or used business equipment.
Both lease and loan options available!
You need to add equipment to your business but you don’t want to tie up your capital. Equipment finance is available with little or no down payment, in both lease and loan options. The approval process is fast, the payment schedule is affordable and there are potential tax advantages.
Most business needs equipment. For some, it’s as simple as a smartphone and tablet computer, for others it’s a 12-burner range and a box truck, or a full suite of dental tools and an X-ray machine. Some equipment can be used for many years, while other items might be obsolete in 24 months. Some must be acquired new, while others can be purchased used from an auction. Some can be purchased outright, while others can be leased. But no matter what you need or the capital you have on hand for it, there are ways to get equipment–and finance it.
At the end of 2015, Congress passed a bill that should encourage more small businesses to spend on equipment. Legislators made the so-called Section 179 deduction permanent, which will allow small businesses to write off up to $500,000 in qualifying equipment in the year in which it is purchased.
There are more equipment financing options for small businesses today than ever before. Many equipment manufacturers now have their own finance arms, just the way auto dealers do. In addition to banks, there are also now online sources of equipment financing, which can be faster to arrange. Depending on your industry and the equipment you are seeking, you may be able to qualify for low-cost equipment financing in the form of a loan guaranteed by the U.S. Small Business Administration.
With lease finance, you could be able to structure terms in a way that best meets your budget. You should also know that, if you get financing to lease equipment rather than buying it, you will be able to keep your bank and other lines of credit open.
You can use equipment financing to buy or lease equipment, whether that equipment is new, old or refurbished.
New equipment gives you the opportunity to get the latest technology and a full warranty. When you buy your equipment, you gain an asset that you can sell in the future–and bank the benefits of that sale–or use as collateral for the next stage in your business’ growth.
If the technology in your industry changes frequently, leasing can help you get current equipment that you will hold onto only until the next upgrade appears. You will pay for your leased equipment in small monthly amounts, which can free up capital for other purposes. While it will cost you more to lease a piece of equipment than to buy it, some lessors offer a purchase option that applies a portion of your lease payment towards the purchase price.