The Benefits of an Equipment Loan
With the coronavirus setting a new normal for employees, there might be a few reasons why a business might need equipment leasing. With cash flow tight, you may not want to spend all your cash and income just in case business isn’t back to normal right away. You may want to save your money for things like inventory or payroll or perhaps on your lease.
But your business may have new demands. Maybe you need to make your employees more mobile and purchase new laptops just in case they need to work from home. Maybe you had an open floor plan and now new regulations mean that your employees need cubicles and a different type of office layout.
Whatever the reasons are, your business might need new equipment to keep running. Equipment leasing allows you to lease whatever you need from a lender. You make monthly payments for a set amount of time, and at the end of your term you either negotiate to renew a lease or you purchase the equipment at market rate.
Equipment covers a lot of things!
Many will be very tangible: a forklift or a back hoe are pieces of industrial equipment that you might need if you have a warehouse or a construction business. But what if you are a restaurant or retail store that wants to offer online ordering and checkout?
Things like a new operating system, a new accounting software, a CRM program, and payment processor are considered equipment too!
There are many things to consider with equipment leasing. The biggest two are monthly cost and end purchase cost. Make sure you take a moment to consider what you are wanting to finance or lease, and what are the short term and long term costs involved? If you are buying something that has very little value and you will need to repurchase every two years like a computer, equipment leasing that has a lower monthly rate that you renew every two years so you can re-purchase newer computers might be a better plan. But if you are planning on purchasing your equipment outright at the end of the leasing terms, a plan that puts more money toward your principle every month might be better, even though the monthly cost is higher.
Equipment leasing is a great option for companies who want to expand and scale their company in the short term and needs their cash for other resources. It’s easier to afford $1000 a month for a computer program that will help you take on $5000 a month in extra orders! But it doesn’t make sense to spend $25,000 in one day and empty the coffers.
If your company has a controller or accountant, ask them for advice for options on what items might be a good fit for financing or leasing. If you don’t have access to one, reach out and tell us what you are wanting and needing, and we can help you figure out if it is a good fit for our equipment leasing program.