Equipment Financing

Most companies need some sort of equipment to stay in business, whether a forklift, a tractor or a postage machine, these pieces of equipment are essential to the daily operations of the company. Generally companies have two choices when it comes to acquiring equipment, leasing or purchasing. If you are purchasing your equipment there are different types of financing such as a traditional bank loan, a cash advance or a line of credit.

Leasing Equipment

Leasing your equipment has many advantages and can help your company to grow and expand into greater markets. When you choose to lease your equipment you will not need to take out a loan, which means there will be little change to your cash flow. When it comes to financing leased equipment you just need to be sure that your company can afford the necessary payments while still earning a profit. Leasing is often a great option for many companies because it allows the company to have the equipment so that they may keep making a profit, but not be burdened with another loan payment. Lease terms are usually flexible, lasting for no more than four years, so you will generally be able to adjust the lease according to your needs. At the end of the lease you will generally have the option to purchase the equipment for a discounted price.

Purchasing Equipment

If you decide that purchasing equipment is the best route for your company then you do have some options when it comes to financing. Equipment loans can generally be obtained through the Small Business Association and will have low interest rates and easy terms. Sometimes if your company can prove that the purchase of certain pieces of equipment is needed to preserve jobs or create jobs, you can seek loan assistance from your local government. Depending on how long your company has been in business and how much debt you currently have, sometimes the best financing is a simple bank loan with a fixed interest rate. Purchasing equipment can be just as beneficial as leasing, as you will be able to deduct a certain amount of the cost from your taxes and you will not be bound by a lease agreement. If you desire you can use your equipment as collateral for another loan, a leverage that leased equipment may not be able to provide.