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Small Business Equipment Leasing, is it a wise choice?

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Published: 11Oct2009
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Whether you're starting up a business or in the process of expanding the business, funding can be a challenge. Applying for a business loan can take time and you may not want to wait too long. Therefore, why not consider equipment lease financing?

For many successful businesses, equipment leasing has greatly helped them in getting the financial assistance they need. Is it really wise to lease equipment? To answer this question objectively, perhaps it's best to take a look at the advantages that leasing equipment offers for a business:

Equipment leasing frees up your cash flow. Equipment leasing does not require a down payment. An equipment lease allows a business to pay for the equipment in monthly installments so there's no need to put in huge amount of money just to get the needed equipment.

If you want, you can also apply for a lease term that enables you to submit your payments on a yearly basis. Thus, you can use your existing finances to support different functions of your business such as the production, manpower or marketing campaigns.

Equipment leasing gives easy approval. Compared with obtaining a business loan from banks, equipment leasing isn't too complicated. Most equipment leasing companies will only consider the last six months of your credit history. In addition, leasing firms will require a business plan to be submitted and a list of the equipment you wish to obtain.

Preparing the necessary documents in advance would help speed up the processing of your equipment lease application. Once you have submitted the necessary documents along with your leasing application, you can expect to get immediate approval and get the devices or machineries you ordered right away.

Equipment leasing lets you use state-of-the-art equipment. Purchasing the latest equipment in the market can be really expensive. As a starting business or as a growing business, you may have a hard time getting sufficient budget to buy these machines especially if you need a lot of equipment.

Nevertheless, leasing gives business owners a one-of-a-kind opportunity. Yes, through equipment leasing, you can choose the latest equipment in the market without breaking your budget.

Equipment leasing protects you from obsolescence. Devices are constantly modified and better versions are introduced in the market almost on a yearly basis. Purchasing equipment doesn't give you the leeway to change old or obsolete equipment as easily. By leasing business equipment, you can choose to replace your leased equipment for newer models in the market.

Using only the latest in technology will surely give your business the productivity and the edge over your competitors. To avail of this option, make sure that a "modern equipment substitution clause" is included in your lease term.

Equipment leasing gives an entrepreneur special tax benefits. Leasing payments are considered as monthly expenses or operating costs, not debt. Thus, it is possible to write them off from your taxes. However, to be sure, it is best to consult matters about filing taxes with a business lawyer or with a certified public accountant.

Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to small business equipment leasing, SBA loans and new business loans.

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