5 Tips for Securing Equipment Financing
Equipment is important for every business to operate. Perhaps you have a construction company and need trucks and backhoes. Alternatively, you may run a technology firm and need computers and desks. Whatever your needs, it can be helpful to secure equipment financing to help pay for this significant expense. However, many small business owners aren’t sure where to start. Here are some tips.
1) Work With Dedicated Commercial Funders
Don’t just go to your bank and take out a traditional loan. You may be surprised by how much easier getting the right funds for your equipment needs is when you work with a dedicated lender. Many commercial lending firms specialize in equipment loans. They can likely offer you more favorable terms due to their experience with this type of loan.
2) Lease Equipment
If possible, lease your equipment rather than buying it. This is especially important if you run a small business or if you need updated equipment regularly. Ownership has its benefits but is often more expensive and more troublesome than it is worth. Leasing can help you get the equipment you need without the hassle of needing to update it or invest heavily upfront.
3) Use Tax Advantages
There are plenty of tax advantages for both leasing and financing equipment. This can help you make the most of your funding. For example, Section 179 is a tax deduction that lets you write off up to $500,000 in the year you purchase equipment.
4) Take Advantage of Flexible Terms
Many lenders will give you relatively flexible terms, especially if they specialize in this type of loan. Whereas a traditional loan may require a 20% down payment, some lenders won’t ask for one at all. Others may offer different repayment schedules to help you meet your payments more easily. Check out some of the options available, you may be surprised at how willing lenders are to work with you.
5) Maintain Working Capital
Try to avoid spending all your cash on equipment. You need working capital to keep your business running smoothly. Whether you use a funder who provides 100% of the equipment cost or lease the equipment instead of buying it, be mindful of your current cash after the purchase.
These tips will help you secure equipment financing that is more favorable for your business. A little research and shopping around can help you get the items your team needs without overextending your budget.