Having the right equipment and technology is critical to running a successful business. It can help improve efficiency, boost productivity, increase sales, and significantly improve your firm’s bottom line. But purchasing new equipment and technology outright means using up precious working capital and reducing cash-on-hand that may be needed to acquire inventory, purchase supplies, pay utilities, or compensate your employees. However, purchasing the equipment isn’t your only option. 80%of American businesses choose to lease their equipment.
If you’re still on the fence about leasing your equipment, here are four main advantages that you should keep in mind when you make your final decision:
Getting your equipment leased is quicker, easier, and definitely more hassle free than purchasing them through applying for a bank loan. Banks will usually take their time in reviewing your credit history and financial records, records that most companies might not even have. Even after that, the chances of getting approved aren’t that high especially if you’re a small or starting business. Companies that offer equipment leasing, like Ironwood Finance, will only require an application and a copy of bank statements from the last three months.
Equipment financing results in better cash flow, better asset management, and some potentially large tax deductions. Under the 179 IRS Tax Code, leasing is 100% tax-deductible as an operational expense. We’ve had tons of clients rave about how much they’ve saved on their taxes by using our equipment lease back option.
Getting your equipment leased instead of getting a traditional bank loan enables you to obtain better and upgraded equipment. Talk to the company you’re working with and have them tailor the length of the lease to the equipment’s operating life. Not all companies are flexible like this, but Ironwood’s equipment leasing program is. This will allow you to end your old lease just in time to open a new one for a more updated version of the equipment. If the equipment you are using for business is new and state of the art, you will not need to worry about sudden break downs and what it will do to your budget.
Lower monthly payments are easier to budget than costly upfront payments, especially in the case of businesses who need expensive heavy machinery. This set-up will also give you the option of choosing the equipment you really want instead of settling for something because it has a lower initial cost. Additionally, it will help maintain working capital that can be used in other areas of the business.