Equipment financing can help you boost output and revenue while freeing up cash for other projects. For many business owners, the high costs of new equipment can hold them back from expanding their operations or ramping up production. But equipment leasing and loan options provide a more affordable solution that can be tailored to your needs.
How Does Equipment Financing Work?
Equipment financing is a little different from a traditional small business loan or line of credit. Lenders will provide financing to fund equipment purchases, which the business then pays backs through a monthly payment program. However, this is where things start to look a little different from standard loans or a business credit card. With this type of lending, the purchased equipment is used as collateral and may not be fully owned by the business at the end of the term. Usually, there will be an option to buy the equipment for a fair market value at the end of the lease term (resulting in a lower lease payment). Most of our clients actually purchase the equipment for $1 or $0 at the end of the lease.
Benefits of Equipment Financing
Getting new equipment through financing can offer numerous benefits to your business. Let’s look at some of the biggest advantages of equipment loans and leasing options.
Frees Up Cash
Using equipment financing options means that you don’t have to invest your own capital in the purchase. This can allow you to maintain a healthy amount of working capital or divert the funds into other opportunities or projects that will drive your business forward. Instead of putting it all into equipment, you’ll have more cash available for expansion, product development, or marketing.
Gain More Advantage over the Competition
Smart equipment investments can improve output, profitability, and revenue. But your manufacturing process or tools of the trade can also be a crucial point of difference from the competition. Having the most innovative or state-of-the-art equipment can increase your brand perception and help to position you as an industry leader. This, in turn, can help you to charge premium prices which again improves revenue and profitability. Equipment financing can make the latest technology more affordable and accessible for companies who need it.
Immediate Business Impact
Equipment financing enables you to get the tools that your business needs right now, instead of waiting months or years to save up enough cash. This means that you can reap the rewards immediately, whether that’s through increasing output, improving quality assurance, or boosting profitability. Having access to the latest equipment can catapult you ahead of the competition and enable you to take advantage of opportunities that you wouldn’t otherwise be able to.
Most modern financial institutions will work with you to build a customized financing solution that’s tailored to your unique business needs. Equipment financing can be personalized to meet your accounting strategy, cash flow requirements, or tax planning. Some lenders will support you with a plan that suits business cycle fluctuations or matches seasonal cash flow variances. Most equipment manufacturers will also be happy to share ways that other customers have tailored their financing options in different situations.
Unlike capital expenditures, equipment leasing and loan interest payments are usually tax deductible. This means you can offset them against your revenue, which reduces the amount of tax that you are charged overall. You can also choose to ‘depreciate’ the equipment based on a number of different factors which can further reduce your tax liability.
Another benefit of getting equipment quickly is that the price is locked in, so you get the best deal. Most prices rise over time due to inflation or increased market demand, but you can avoid this which helps to reduce the total cost overall. If you’re planning 3 or 5 years out, then equipment financing can be a useful tool to maximize your cash flow.
Choosing to purchase the equipment outright may save you interest fees but also means that you’re assuming the full burden of risk on the investment. If it doesn’t deliver a return as quickly as you’d projected, then you may find that your business experiences cash flow issues. But if you spread the cost through equipment leasing or a loan then you give yourself more time to generate a strong ROI and protect your capital too.
Aids Purchasing Negotiations
Instead of buying a single piece of equipment, financing can allow you to buy the entire range. This puts you in a much stronger position with the supplier, enabling you to negotiate lower pricing or better terms. You may also be able to take advantage of equipment and maintenance packages. Some financing options will fund installation, training, and up-front maintenance in addition to the cost of the equipment itself. By bundling these services into one package, you can spread the cost over monthly payments and benefit from the convenience of everything in one turnkey solution. By boosting your purchasing power, financing can help you to get a better deal overall.
Equipment financing offers business owners numerous benefits over outright purchasing. It frees up cash for other projects, enables you to act quickly, and helps to minimize risk. Customizable solutions can help you to benefit fully from the tax advantages and beat inflation too. It also gives you an opportunity to differentiate from your competition and get the best possible value from your equipment supplier.
At Strategic Capital, we approve equipment financing in as little as sixty minutes and can give you access to the cash in just 24 hours. Though credit is a very important factor that lenders use to gauge your qualifications, it is certainly not the only one. A well-established business with consistent growth is our primary metric. Our three main qualifications are having a minimum of 2 years in business, a personal credit score of 600 or greater, and monthly revenue (gross sales) exceeding $10,000 on average. We don’t require you to provide collateral, so you can sleep soundly at night knowing that your home and business assets are not at risk.
How We Can Help
Strategic Capital offers equipment financing options that support organizations across the USA. Interest rates start at 5.49% with a monthly payback schedule and terms can range from 30 days to 72 months based on your needs and the type of equipment being financed. Often, the choice is available to lease the equipment with a $1 buyout plan or you may opt to buy the equipment for fair market value at the end of the lease term which will result in a lesser lease payment. Our competitive repayment terms and low interest rates mean you have more money to reinvest in your business.
Transparency, innovation, and expertise are the driving factors behind everything we do. With a talented team of advisors, a plethora of funding partners, and the best technology available -we go above and beyond to help our clients receive their capital rapidly with the industry’s most competitive repayment options and interest rates. We want to break speed records, not bank accounts.
Upon submitting your application, it’s reviewed by a dedicated Capital Advisor. We generate the best rates and terms at lightning speed through our funding matrix and robust lender network. Yep… it’s that simple. Learn more about our equipment financing options here.