Equipment Financing Tips and Tricks for Today’s Small Business
Most business owners are obliged to somehow acquire the equipment needed to conduct business operations, whether that be office equipment, computer equipment, or heavy machinery. Since most companies don’t have the working capital to purchase that equipment outright, it’s usually necessary to secure equipment financing from a lender who is willing to work with you.
The two most common ways to acquire the funding needed for equipment financing are through loans or leases. When you take out a loan to purchase equipment, you will generally have long-term goals in mind, and you will generally intend to keep the equipment indefinitely as a long-term asset. In an equipment loan, the lender will pay most of the cost of the equipment, while your company is responsible for a down payment equal to approximately 20% of the total cost of the equipment, after which you would repay the remainder of the cost in monthly installments.
In a leasing arrangement, you would not be responsible for a big down payment like you would for an equipment loan, and you would not necessarily be looking to keep this equipment for any extended period of time. In fact, equipment leasing is better suited to those companies which will need to swap out equipment every year or two in order to stay current.
You can think of leasing as a form of equipment financing which amounts to paying a fee for borrowing the equipment, as opposed to borrowing money in order to buy the equipment, as you would in an equipment loan. There is also a certain amount of flexibility involved with equipment leasing, in that by the end of your leasing period, you have the option to purchase the equipment outright, to renew the leasing arrangement, to establish a new lease on different equipment, or to walk away from the lease altogether.
Equipment financing with Desert Star Commercial Consulting
If your company needs some kind of equipment to accomplish business requirements, but you lack the funding to secure that equipment, Desert Start Commercial Consulting may be able to help you. Contact us today to find out about how we can help you acquire the equipment financing necessary fro your company’s success.