Copyright (c) 2009 Irish Taylor
In a business environment, equipment leasing is a recognized method of financing. Many business owners and enterprisers turn to leasing instead of purchasing new equipment and machinery. As a business owner, what benefits can you from equipment leasing? Here are the basics:
Equipment leasing costs less. Compared to purchasing, leasing costs much less and is an ideal option for businesses with small or limited budget. Most lessors do not require down payment. If there is a down payment, the amount required is small and easy on the pocket.
In addition, the monthly lease or rent is affordable even for start up businesses. There's no need to spend half or a third of your business budget on equipment alone. Through leasing business equipment, you can utilize your financial resource in more ways.
Save your business's credit limit. Leasing allows you to obtain the equipment you need to start your business operations without using your credit limit. If you need additional funding or cash assistance for future projects and expenses, a healthy credit would easily impress prospective lenders and you can get approved more quickly.
Eliminate obsolescence. Equipment and machines are constantly evolving. Almost every year, you can find a more enhance version of an equipment in the market. With purchasing, you're bound to the one you've bought because you've already spent a lot on that particular equipment. On the contrary, leasing gives you the flexibility to exchange the equipment you have for a better one at any time. More importantly, being able to use the latest technology in the market ensures your business's maximum performance.
Uncomplicated process. Applying for a business loan or an equipment loan can take some time. Not only that, banks and lenders are often very particular about the documents you need to submit. Failing to complete your requirements can cause delays or a disapproval of your application. On the opposite, equipment leasing doesn't require a lot of documentations.
Typically, you can submit your application online, get a response in that same day, and receive the equipment you leased in a few days or within a week or two. Those with good to excellent credit can take advantage of lower interest rates and better deals from lessors but a bad credit also does not prevent one from getting a lease.
Keeps cash flow steady. Equipment leasing helps keep the business's cash flow steady. Since you won't be spending a large percentage of your funds in buying equipment, you can place a larger portion of your budget on your cash reserves. Instead of taking out a loan, you can use your available funds instead to cover up your expenses.
Tax Advantages. Another benefit of leasing is the tax advantage. Purchases are automatically taxed while leased assets can be exempted. Since the equipment remains to be the property of the lessor, leased equipment can be written off from your taxes. Ask your attorney about your tax privileges particularly if you are a homebased business owner.
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Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to
Equipment Lease for Startup Business, SBA loans and
Startup Loan.
