Benefits of Equipment Financing Beyond Paying for Equipment
If your business is thriving and you need to take the next step toward production options, you might find yourself challenged by cost of all that new equipment. Although definitely necessary if you are going to take your efforts to another level, having the cash to pay for large pieces of machinery isn’t always readily available. Even if it is, do you want to tie up your liquid asset in equipment that will eventually produce a return on investment but can’t help in immediate need?
Fortunately, many sales and production companies offer equipment financing programs to assist business owners with acquiring what they need without compromising their financial status. Even better lending rates can come from equipment loans offered by banks or non-bank lenders. In this process, you apply for a loan based on the cost of the equipment you need to purchase. The lender will use the asset value to secure the loan, and you make payment to lender on a monthly basis through your revenue. With an equipment loan of this nature, you will often be asked to pay a down payment to qualify for the financing, as well as present a satisfactory credit rating.
Because of the cost involved with equipment financing, you should be cautious about what you choose to finance. Preferably, you should invest in an item that will retain its value over the course of the loan and is directly responsible for increasing your companies revenue. This way, you are wisely combating the lending rate with a greater revenue return.
There are additional benefits to a financing program for your equipment that extend beyond the initial purchase of the needed equipment. The loan gives you immediate access to cash, so you don’t lose time or income waiting to take the next step in business growth. Additionally, you will find your profit margins increase over time as you pay off the loan. During tax filing, you can get tax deductions on the cost of the loan, as well as take advantage of the depreciation in value for the asset over time. You will begin to establish a credit history for your business, making it easier to secure funding in the future for equipment or other needs.
There is no doubt it will take an investment to continue to expand your business, and often a significant cost is associated with equipment purchases. Using equipment financing can keep you on track without sacrificing your cash or timeline for growth.