Benefits of Equipment Financing
What restaurant operates without ovens and grills? What auto mechanic stays open without a car lifter? What Laundromat lacking washers and dryers has customers? None of these businesses are able to function without necessary machinery. For independent startups, however, the cost of such accessories can be a significant barrier to getting started. Equipment financing makes it possible for these types of independent operators to begin. Here are some reasons for the overwhelming appeal of this financial avenue.
Cash Flow Retention
The most significant advantage of equipment finance companies over traditional lenders is the preservation of cash flow. Without the necessary operating funds, businesses come to a screeching halt. Lenders designed to help companies needing equipment understand this and will structure deals that make sure adequate levels of capital are retained for work to continue.
Loans provided by established banks often take a long time to approve. Equipment loans are much easier to obtain and far quicker, an especially important factor for heavy equipment businesses that tend to deal with high volumes and low margins.
Equipment finance lenders understand the challenges small businesses face. Although rates and terms vary, they are prepared to make offers you will likely find agreeable. Costs can sink as low as 1.25% and loans may be limited to as little as four months. Even better, payment conditions can be periodically adjusted around your credit and overall sales.
Leasing equipment means you are never locked into one particular model. With a bit of paperwork, you can switch out your older device for the latest and greatest. Take advantage of technology’s hottest features and eliminate obsolescence as a concern.
Certain equipment finance structures can reduce your tax liability and deductions are often available. Consult with your tax advisor for advice regarding your specific situation.
Preserved Bank Credit
Because equipment financing operates outside of traditional institutions, your bank credit remains untouched. Leaving these credit channels alone preserves them as a safety net for when additional cash becomes an immediate concern.
Instead of receiving financing for every piece you require, equipment funding rolls everything into one, convenient bill. Paperwork is reduced and payments are simplified, saving time and easing the task of accounting.
The advantages of equipment financing are significant. If you plan on opening a business that mandates the use of heavy machines, take advantage of a lender whose duty is helping people under your circumstances.