For start-ups and small business owners alike, buying equipment can be a costly and lengthy process. Thankfully, there are others ways to obtain the equipment that your business needs than just buying it upfront, such as financing. Depending on the type and price of the equipment piece purchased, it can be for a substantially lower amount than your typical bank loan. Therefore, this is one of many reasons why financing is the option for qualified small business borrowers.
Read below to discover three reasons why financing equipment may be best for your business:
Financing unties capital.
The main benefit of financing is that it leaves more room to access cash, which is the life-blood of every business. Instead of purchasing equipment in full which ties up a large sum of cash in a depreciating asset, you can save your cash flow by paying monthly. Good cash flow grows businesses, so maintaining a healthy cash flow is essential. Financing, rather than getting a loan from the bank, allows business to use that loan money for other operating costs, like payroll and marketing. And access to more cash creates a safety net to protect cash flow. The cost of financing will be small when you compare it against the business growth gained from maintaining good cash flow.
It’s faster and safer
Most companies get a loan from the bank and then pay the vendor cash for equipment. Financing equipment is much faster than getting a loan from the bank because financiers use private money, making it easier to get funds released. American Capital Group, for example, can fund deals in two days or less. This speed means you can get your equipment in sooner and prevent delays in your business’s production.
Financing is also safer than getting a loan because banks generally put liens on your business, which is essentially putting your business at risk in the unlikely event that you default. They may even put your personal assets under the business loan if you are not careful. When you finance, the only asset that has a lien is the equipment itself and nothing more. This protects you from putting up more than the worth of the equipment.
You can personalize your terms.
Every company is unique when it comes to their financing needs, so why shouldn’t your plan reflect that? Fees are dispersed based on a two-year to a five-year-plan, which provides small business owners the flexibility to pay back on a schedule that works best for them.
Keep up to-date with technology
Equipment is continually progressing and evolving, so your business should keep up with the newest technology. Owning outdated equipment can stifle your company’s growth, and can be very expensive when it comes time to purchasing updated technology. With financing, your business can utilize the latest technology minus the up-front purchasing expense.
You can write it off your taxes
Yes, you can write-off most types of equipment. As of 2019, Section 179 code entitles you to write-off up to $200k of equipment costs as an operating expense. Make sure that you finance your equipment under a lease that will allow for it.
Utilizing the latest or used equipment doesn’t have to be expensive. At American Capital Group, we can provide your business with innovative financing solutions to help meet your equipment needs, with the lowest monthly payments, guaranteed.
Discover the simplicity of receiving fast financing and the equipment you need. Click here to secure the financing you need to help your business grow.