Equipment financing offers an array of benefits for any business. Keep reading to learn some of the biggest benefits and why this may be a smart option for your business.
Lower Initial Cost
When it comes to cash flow, your business needs it to survive. The initial cost of financing your business’s equipment purchase using a lease is usually zero. Sometimes, equipment leases don’t require any down payment and provide 100% financing.
Simple to Secure
Leases are usually much easier to qualify for than a traditional loan. This is especially true if you have a business that is working in turnaround mode or if your credit has experienced issues or speedbumps along the way. It is a great way to start getting your business “back in the black” by using your new equipment.
Reduce the Risk of Owning Equipment
While most people discuss the way equipment goes obsolete quickly, you need to consider other functional and operational obsolescence issues when figuring out the best way to finance new equipment, too. One example is if you have a piece of equipment that is working fine and doing what it is supposed to, but changes in your business’s direction may result in it becoming obsolete. Leases will work as a type of hedge against this type of obsolescence.
Tax Depreciation Benefits
You can get an expense deduction for any business equipment that meets the qualifying requirements. This may let you deduct the cost of some equipment as expensive rather than capitalizing it and depreciating it for several years. Also, the bonus depreciation was expanded by the Tax Cuts & Jobs Act from 2017. This means that the deduction is equivalent to 100%of the first year of depreciation for the qualifying equipment.
Equipment Financing and Your Business
When it comes to equipment financing, there are more than a few benefits offered to your business. Be sure to review the information above to see what these benefits are and how they may work in favor to help support your ongoing growth and success.
Being informed and knowing about equipment financing will help you decide if it is something you should consider. Not all businesses will need equipment financing, but it can be invaluable for others. Keep this in mind and consider your financial situation to see if it is something that will work in your favor. For many businesses, this is going to be valuable.