No matter what type of business you run, you likely use some kind of equipment. This can range from furniture to electronics to heavy machinery. Sometimes, you might not have the funding available for new equipment when you need it. For times like this, there are financing options that you can use. There are certainly scenarios when purchasing the equipment outright makes more sense, but equipment leasing has several benefits as well.
1. Less Financial Burden
Leasing equipment might be the better option if you don’t have much cash to spare. While you can get a loan to make a purchase, you are often required to make a downpayment as well. This is not generally the case with a lease. Monthly payments may also be lower with a lease. Along with this, maintenance and repair fees are often included in your agreement which can save quite a bit of money over time.
2. Convenient Upgrades or Disposal
When you buy new equipment, it becomes your responsibility. If it becomes outdated or you decide that you no longer need it, you’re on the hook for disposing of it. If selling isn’t a feasible option, it can result in financial difficulty as well. With equipment leasing, you are only renting the item so you can return the equipment when you’re finished with it. You can also swap it for something newer and better without all of the hassle of buying and selling.
3. Easier Qualification
For small businesses, qualifying for a loan isn’t always easy. If you have a low credit score or have only been in business for a short time, a lender may see you as a risky investment. Applying for a lease is relatively simple and does not usually have as many requirements, making it a great choice if you’ve had trouble getting a loan.
4. Tax Benefits
Many business expenses can be deducted on your taxes, including the money you spend on equipment. Both purchased and leased equipment qualify for this purpose. Because your monthly expenses stay the same with a lease, it is easy to determine how your taxes will be affected.
If you need new equipment and are looking into financing, then it is worth considering equipment leasing. This can be a beneficial option for your business and may make more sense for you than buying, especially if the equipment is likely to become outdated quickly. A lease is often more convenient and easier to get than a loan.