Whether you’re a restaurant owner in need of a pizza oven or a transportation business owner looking to add another vehicle to your fleet, you need to find the most compatible financing program for your specific needs. With so many types of business financing programs available, finding the best solution for your business isn’t easy. If having the right kind of equipment is essential to your small business, understanding your equipment financing and leasing options is also critical. This Union Commercial Capital blog post discusses the benefits of both equipment financing and leasing.
Benefits of Equipment Financing
1. More Of A Steam-lined Process With a more traditional loan, lenders and banks want to see years of financials and a fair credit score, among other documentation. With an equipment loan, lenders are less concerned about your credit score and financial history, since the equipment you’re purchasing will be used to secure your loan. The equipment financing process is simple and hassle-free. Union Commercial Capital, for example, has a one-page application, and we can provide credit decisions in one business day.
2. Preserve Your Business’s Cash Flow Financing equipment is a great way of preserving your business cash flow. Rather than paying the lump sum upfront, you can just make monthly payments over terms of 1 year all the way to 5 years in most cases. Not to mention, it gives your business another asset, which can be put to good use if you ever consider getting another loan or line of credit later on.
3. Tax Incentives The maximum yearly tax deduction for those financing equipment is currently set at $1,000,000, which means, financing is often completely tax deductible for small business owners.
Benefits of Equipment Leasing
1. Cash Flow Flexibility Like equipment financing, leasing your business equipment preserves your business cash flow because you aren’t making a 100% cash payment out of pocket. Instead, you will pay a monthly lease payment that is designed around your business’s needs. This allows you to save your working capital for investing into supplies and inventory for contracts or unexpected things like a slow quarter or sudden economic downturn. It’s a good idea to preserve your cash and bank credit lines and not tie them up in depreciating assets.
2. Stay Up To Date With Your Equipment Or Technology If you find that it’s critical for you to always upgrade your equipment or technology, than leasing may be the better option than purchasing. When you lease equipment or technology, your business will benefit from its usage, and you won’t have to worry about the responsibilities of ownership. Leasing makes it possible to obtain the most up-to-date equipment that can help your company stay ahead of the competition, as well as grow.
3. Tax Incentives Equipment leasing provides the same tax incentives as equipment financing. A lease may offer you the fastest possible way to write off the costs of using new equipment. This lets you use money you would have paid in taxes to help keep your business modern, competitive, and grow.
How Do I Start The Equipment Leasing or Financing Process?
The first step of the equipment financing process is to determine what type of equipment your business needs. Let’s say you own a small repair business and need a new utility truck because you are looking to add another employee. All you need to do is provide the type of truck you want, and the reasons why it will benefit as well as grow your business. Here at Union Commercial Capital, we provide a one-page application, and can provide credit decisions within one business day.
Union Commercial Capital hopes this blog entry was informative for your equipment purchase needs. Feel free to contact us if you have questions or would like to move forward with a program tailored to your business’s needs.
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