Equipment leasing allows you to rent necessary business equipment for a period of time without committing to buying it. Unlike purchasing, you don’t need to first procure funding for costly equipment. With leasing, you make payments on a predetermined payment plan. When the lease ends you may choose to renew your lease or buy the equipment, depending on your agreement with the lender.
Types of equipment leasing
There are two basic types of equipment leasing:
- Capital lease: A capital lease allows you to list the equipment on your balance sheet as if you owned the asset. That’s because the business is likely planning to buy the equipment at the end of the loan. These leases tend to have higher monthly payments.
- Operating lease: Operating leases are ideal for equipment that you plan to change out frequently, like computers. With an operating lease, you pay a lower monthly payment and do not include the equipment in your balance sheet. You will either return the equipment or renew the lease when the rental term ends.
How much money can I get for equipment leasing?
In most cases, new customers can get up to $150,000 in equipment financing in 24 hours. The speed at which funds can be accessed is a primary feature to this funding source.
Benefits of equipment leasing
Leasing allows you to keep up with rapid demand for your growing business. If your work is seasonal or if you have busier times of the year, as in construction, equipment leasing allows you to fulfill orders and not be left paying for a bunch of equipment when you no longer need it.
With equipment leasing you generally don’t have to provide a down payment or collateral. You can keep your cash handy for other business expenses, and you don’t risk your capital on funding a purchase that may not be worthwhile.
The equipment leasing application is a simple process that doesn’t require as much financial paperwork as buying would. If your business has less-than-stellar credit, there are equipment financing options to help.
Flexible terms give you options for how long you lease the equipment, what you pay and what you can do with the equipment when the lease ends. You might find it’s working so well that you want to buy it, or you can trade it in for the latest technology. With equipment leasing you always have access to the latest models, allowing you to perform quality work for your customers.
If you have old equipment you no longer need but you aren’t ready to buy the latest model, you may be able to get some trade-in value from the lender. You don’t have to worry about finding a buyer and selling the equipment yourself.
If the equipment you lease needs maintenance, the lender is responsible for repairs. This relieves you of the burden of paying to fix a piece of equipment for which you’ve already sunk in a lot of money.
Although one benefit of buying is claiming the tax deduction for depreciation, your equipment lease is also tax deductible. You can deduct up to 100 percent of your lease cost if you meet certain criteria and don’t go over the $1 million maximum.
Whatever industry or business you are in, Tenet Financial Group can help you determine if equipment leasing is a sound business decision based on your needs. Contact Tenet Financial Group today to discuss equipment leasing.