Many businesses find that they need to set aside funds to purchase equipment as they grow. However, it can be difficult to make such compromises, especially in these economic times. Why put your operating budget in the red by accepting additional financing, when it’s far more advantageous to secure one of the many leasing programs offered by equipment brokers to get the equipment you need today?

Financing against Leasing

For established businesses, those that have been operating successfully for at least two years, obtaining financing for equipment purchases can be a difficult prospect to face. With rising interest rates, banks and loan companies may require you to sign additional collateral to secure the loan, or even enforce such loans with a short-term note that will have to be repaid with fees in less time than the business. may be able to pay.

Leasing programs, on the other hand, are much more flexible and can be customized to the exact needs of the business. Not all equipment purchases are meant to be long term and may only be needed for a limited time. Financing through loan agencies in these circumstances would be less than efficient, because once the loan is paid off, you still own the equipment, and reselling it once it is no longer needed will not return the initial investment. With equipment leasing, you can easily add clauses that cover the return of unnecessary equipment, sometimes at a financial bonus to your business.

Types of Equipment Leases Available

For those looking to only get short-term use of necessary equipment, there are two programs that can be used to your advantage. The first, known as an operating lease, allows a business to lease the necessary equipment for the exact amount of time it is needed, at an affordable rate. Once it is no longer needed, it can be easily returned to the leasing agent for a small fee. The second, known as a master lease, allows the business to try out the equipment it was considering purchasing for a specified period of time, without any transfer of ownership. At the end of the initial lease, they have the option to extend that lease, without having to renegotiate.

For those interested in purchasing the equipment but don’t want to commit working capital to business financing, capital leasing is probably the best leasing option available. Equipment is purchased through a lease with affordable monthly payments and at the end of the lease, a final payment secures ownership and transfers ownership rights. However, for tax purposes, the equipment is considered to have already been purchased during that tax year and tax credits for making that purchase may apply, even though the final payment for the equipment may take a year or more.

A lease that actually pays you money

For business owners looking to the future, they may already have assigned equipment they’d like to sell but can’t until the operations around them have concluded. This would normally mean obtaining a loan to finance the start-up of the future operation, including the purchase of new equipment. With a sale-and-leaseback type of lease program, business owners can sell future unwanted equipment to a broker, for a negotiated full purchase price, and then temporarily re-lease it at an affordable rate. This gives them the use of the equipment for as long as they need it, plus the cash flow they need to start the new operation. At the end of the term, the broker takes possession of the sold equipment.