Do you need equipment to launch or grow your business, but wonder how you’ll pay for it? This is a common concern for businesses – especially since it can have a big impact on your cash reserves and production timeframes. According to the Equipment Leasing and Finance Association (ELFA), 78% of businesses choose leasing over purchasing commercial equipment.
For growing organizations regardless of size, equipment financing makes good business sense. Here are 8 great reasons why.
1. Preserve cash
You can can finance business equipment without a down payment and pay for the assets over time, while earning revenue. Preserving working capital and lines of credit for unexpected operating expenses or investment opportunities is a better use of your resources than buying equipment outright.
2. Expand capabilities
Equipment financing isn’t limited to machinery. You can acquire a wide variety of hard assets and technology solutions ranging from tools and automated processing equipment to tractors, trailers, and storage facilities.
In fact, many organizations leverage financing to acquire smart systems with embedded technology and renewable energy solutions, making their businesses more sustainable and resilient to climate impacts.
3. Maximize flexibility
Meridian OneCap recognizes that every enterprise has different goals, requirements, and revenue schedules. Financing your equipment allows you to “try before you buy.” This is especially important for new businesses or those considering new product extension.
Here are other ways equipment financing helps your business stay nimble and grow more profitably:
Establish monthly, quarterly, or seasonal payments customized to your budget, crop revenue cycles, or other fluctuating demands.
Keep up with changing technology or expand your inventory without renegotiating rates or terms with equipment upgrades and add-ons under a master lease.
Customize finance terms to match the equipment’s useful life – that can’t be done with a traditional loan.
4. Take advantage of fixed rates
No one likes surprises. Financing allows you to lock in rates for the term of your lease. This not only helps improve budgeting and forecasting but also helps protect against rate volatility during inflationary markets.
5. Benefit from potential tax advantages
Depending on your equipment strategy and tax appetite, equipment financing presents opportunities for tax savings. For instance, one business might benefit from short-term, substantial tax rebates, while another may enjoy smaller rebates stretched out over a longer period.
6. Manage assets more efficiently
The value of your equipment is in its use, not ownership. In return for a series of fixed payments, financing lets you use equipment for specified time periods, earning revenue while you pay for it. The risks associated with equipment ownership belong to the lender – not to the business.
In many financing arrangements when the lease term is over, your financing provider assumes equipment ownership should you decide not to purchase it.
7. Bundle equipment and services
With a customized lease agreement, you can finance new assets, installation, operating software, monitoring systems, and even ongoing maintenance under one convenient payment plan.
8. Get expert advice on equipment
Working with an experienced professional who understands your business, market nuances, and equipment features can help you compare and consider all options to determine what makes sense to meet your operational objectives and business goals.
Look for a financing partner that offers a variety of financing options, including operating and capital leases. Meridian OneCap provides exceptional structuring expertise, flexible repayment structures and fast credit decisions.
The bottom line
All these benefits – fixed rates, 100% financing, flexible terms and payment schedules, and even bundling – not only help you strengthen your balance sheet, but also streamline administrative tasks, further enhancing your growth and profitability.