Equipment Financing
Most small business owners choose to lease their heavy equipment or manufacturing tools, mainly because of the uncertainty involved with advancing technology and ever-changing consumer markets. The equipment that works well for you today could very easily be obsolete tomorrow, so buying it outright may not be a good idea. Not only can you end up with useless equipment in your shop, but you won’t be able to sell it to someone else because it will be obsolete to them too. Here at SmallBusinessFinance.net, we can connect you to number of companies that offer equipment financing options.
Equipment leases, or equipment financing as it is often called, come in two main categories. The first, and most common, is called a finance lease. Finance leases are set up with the life span of the equipment in mind and an option to buy at the end of the lease if you choose to keep the equipment. The buyout is generally something small, like one dollar just to pass papers on the item. You can also choose not to buy and you can generally upgrade to better equipment during the life of the lease if it’s developed by the company. Finance leases are very popular in manufacturing circles.
True leases are the other type of lease and are set up for a shorter period of time, less than the actual life of the equipment. True leases are a good option if you know that the equipment you’re leasing will be of value to you for many years to come. Good examples would be the compressors and vacuums used in automotive shops or dishwashers in a restaurant. These are items that don’t change much, even with new technology, and can always be useful. True leases also have a buyout at the end so you can own your equipment outright in less time than with a finance lease.
If you need equipment to run your business, ask yourself if you want to own that equipment someday or just lease it while you need it and either upgrade or get rid of it when you’re done. You’ll also want to evaluate your business situation to determine whether or not you’re solid enough to make that kind of investment right now. Leasing can be a good way to test something new and make sure it’s going to work before you invest a lot into it. Register here at SmallBusinessFinance.net and we’ll help you find the right solution.