Small businesses across America tend to need some type of equipment to make things run smoothly. While many might assume it’s better to purchase these items, the truth is that there are a lot of benefits to leasing equipment that often go under the small business owner’s radar.
Let’s discuss the 7 hidden benefits of equipment leasing.
A leased item is going to leave money in the bank that allows for other costs to be taken care of, such as inventory, salaries, etc.
2. No down payment is required to lease equipment.
As stated above, this can leave a huge chunk of money in the company (or owner’s) bank account, freeing it up for use on other important expenditures. Using financing will also help build credit for future purchases and leases, making it easier to get good deals and fair monthly payments.
For most business, leasing over buying is going to allow for a lot more options on what equipment exactly you want to lease.
When purchasing, you can only finance as much as you are approved for by the bank, but leasing opens up the possibility of having more powerful, more sustainable, and more reliable equipment without necessarily spending the huge amount of money it would require to attain these types of items as purchases.
Because a lease will end and allows the owner to lease new equipment, your business can always have the most current product available. Alternatively, a purchase is going to need to remain in service much longer just to pay itself off.
There’s also the benefit of asset management, especially for some of the upfront and recurring costs associated with new equipment, such as installation and maintenance. Including these items as part of the lease can lessen the financial load on the company compared to purchasing.
Because loans for equipment are typically going to go through the bank and require much more money in the end, leasing tends to be much easier to get approved for. There isn’t as much need to provide proof that the money spent will be paid back, and there isn’t nearly as much interference from the bank.
Thanks to the growth stimulus plans in place by the U.S. Government, leasing is going to help bring in some of the best tax deductions available for small business owners.
As stated by the US Small Business Administration (SBA), people who lease equipment, “may enjoy a potential tax advantage because your lease or rental payments are fully deductible.”
These benefits of equipment leasing over purchasing new equipment should be enough to convince you that it makes more sense to keep your company up-to-date, out of debt, and capable of spending the saved overhead on other important avenues. While equipment leasing isn’t always going to be the best choice, it usually is.
Do some research on the price differences between purchasing that large piece of equipment you need and leasing it for a few years before replacing it with an updated model. You’ll likely find these benefits far outweigh ownership of the equipment.
Watch our video on the hidden benefits of equipment leasing:
Download free on SlideShare: 7 Hidden Benefits of Equipment Leasing