As a business owner, you know that you need equipment. Of course, equipment needs vary based on the business, but some of the things you need are office equipment, fleet vehicles, IT equipment, and more. However, these things can be quite expensive. Often, when you’re just starting, you may not have the funds to procure it all. That is where equipment financing comes in.
In this blog, we’ll explore how equipment financing can help you get what you need. While not spending all of your working capital at once.
10 Ways Equipment Financing is Beneficial
Below, we’ll look at how equipment financing is beneficial for your business.
Flexible financial solution
The types of solutions offered by equipment financing companies are typically flexible and can be tailored to your cash flow, accounting, or tax needs. They offer things like fair-market value (FMV), capped FMV leases, and full payout loans.
Capital preservation is one of the major considerations that make equipment financing attractive. After all, investing in large expenditures is risky- especially for a small business. If you finance instead of spending the cash, it can help alleviate the uncertainty of investing in an asset that may or may not make things better.
Improves expense planning
Consistent budgeting and maintenance of cash flow are other factors that need to be taken into consideration when considering equipment financing. A major capital expenditure results in significant fluctuations in the budget- but financing improves your expense planning. Tax considerations also make a difference. A full payout lease or equipment loan allows you to take a depreciation credit on the asset. While an operating or FMV lease does not allow the depreciation credit- but does allow lower payments.
Offers flexibility based on business cycle
Another major aspect related to equipment financing is flexibility. Some leases allow lower payments while the project is getting started and there is no revenue being generated, seasonal fluctuations in business, and other pertinent circumstances.
Stay up to date
In today’s business world, you must have the latest equipment- but most businesses can’t afford to buy what they need to remain relevant and thriving. By using equipment financing, a business can get what they need without putting out the cash all at once.
Access to equipment access
In some cases, the equipment finance company has experts on staff and offers specialties related to the equipment that other options may not. Plus, many of the equipment financers specialize in certain industries or equipment types. For example; office equipment, medical, IT, construction, manufacturing, etc.
Management of obsolescence
One of the strategic benefits of equipment financing is to eliminate the risk that comes with owning obsolete equipment. This is known as the management of obsolescence. If you own obsolete equipment, you run the risk of losing business. As your customers are more likely to go with someone that can get the job done properly.
Management of assets
Equipment finance allows the management of assets, which means you can make sure that the equipment isn’t being misused. Knowing where your equipment is being used, how much it’s used, and when it’s time to update/upgrade is a critical aspect that is offered by many equipment financing companies. This can also help you know when it’s time to dispose of the equipment.
Offers equipment disposal
Before you procure equipment, one of the things you need to consider is disposal. Most of the time, businesses don’t have the knowledge or resource to manage or sell their old equipment- but an equipment financing company does. You can allow them to manage the equipment so that they will take care of disposing of or reselling the equipment when that time comes.
Reduces your risk
Purchasing equipment involves lots of risk to the business owner. However, as you can see, when you use equipment financing, it removes those risks, which means you can focus on running your business.
When you recognize how equipment financing can help your businesses, you can get what you need to keep your business relevant and thriving. Contact Aspen Capital Solutions today to learn how you can use equipment financing for your business.