When You Should Consider Equipment Leasing
As a business owner, you have to make a lot of challenging decisions. During your growth and startup phases, you likely need to get equipment. However, the choice between leasing and purchasing can be challenging. These are signs that you should look into equipment leasing.
You Want to Preserve Your Cash Flows
When you are starting out or in a growth stage, it can be detrimental to deplete your cash flows on new equipment. You need to purchase raw materials, hire staff and provide the machinery necessary for them to do their jobs. Financing equipment typically requires a significant down payment, which you may not have on hand. In addition, your monthly payments on financed equipment tend to be higher than on leased equipment.
You Need Flexible Payments
Financed equipment requires that you make regular monthly payments. However, if your business is seasonal, this can be challenging during low-revenue months. However, you have a bit more flexibility when structuring your lease payments. Most companies will allow you to pay the bulk, if not all, of your payments during your busy season. You can choose between monthly, quarterly, or yearly payments as well.
You Need the Equipment Temporarily
If you need the equipment for less than 36 months, e.g., you have a project that will only last a few months, it is better to lease it. With the purchase, you will be stuck with the equipment. It will take up floor or storage space and still depreciates when you aren’t using it. However, leases can be customized to specific periods, so you can negotiate your lease for the exact amount of time you need the machinery.
You Don’t Have the Business Credit
Finance companies appreciate established good credit. New companies or those that have poor credit will find it difficult to gain loan approvals. However, there are leasing companies that specialize in working with new companies or those with less-than-ideal credit. You may pay a higher lease rate or have other conditions you need to follow, but they will work with you.
You Need Funding Quickly
It can take months to be approved for an equipment loan. However, a lease can be approved within a few days. In addition, the leasing company takes care of shipping and installation, so you can start working with the equipment quickly.
Equipment leasing has many benefits, but do your due diligence to ensure this is the right choice for your business.
Seek Expert Assistance
Your business needs equipment but you don’t want to drain your professional bank account to buy it. What options do you have? Well, we’re glad you asked! Here at JT Commercial Capital, we are very experienced at helping companies finance equipment so they can make monthly payments on it over time. Applying for our equipment financing or leasing programs can help you obtain equipment without compromising your financial situation.