Are you a start up business needing an equipment lease? Equipment leasing is now available for new businesses as well as well established businesses. Roughly 30% of businesses get their equipment through some kind of equipment leasing service. The kind of flexibility that comes with equipment leasing is hard to match with any other way of getting equipment for your business. Here are nine tips to consider when obtaining an equipment lease for your small business:
- Think about how long you will be using the equipment. Is this a piece of equipment that will become obsolete quickly? Or one that you can go 10 years without having to update it.
- Do you have a business plan? Leasing companies love giving startups a chance but they want to know what kind of experience you have. Make sure you really emphasize your experience, and successes in the industry you are going into.
- Where are you buying your equipment? Many equipment salespeople have their own equipment leasing brokers that they work with. Unfortunately not all brokers can finance a startup business. Allowing their broker to pull your credit then tell them they don’t finance startups will only hurt your credit. Before you fill out their leasing application, make sure their leasing broker can accommodate your special needs.
- Setting up your business. Make sure you have your location locked down! Especially if you have equipment that will need to be installed and put together at your location. We have approved people who are still negotiating leases, but as a startup, you want to make the leasing company know you are serious about your new venture. Also many leasing companies will do a site inspection of your location before making the final payment to your equipment vendor.
- Talk with your leasing broker about what kind of options are available to your business once the lease is over. Can you buy the equipment outright? Is there a clause for continuing the lease?
- Think about what kind of options you have when it comes to vendors. Should you go through a leasing company? Make sure that you are shopping around for the best deal.
- Shop around for the best price on your equipment. Don’t be afraid of used equipment, many businesses don’t realize that equipment leasing can be used to purchase used or refurbished equipment. As long as its still in good condition and has retained some value, an equipment leasing company can finance it.
- If you are buying equipment that will lose its value fairly quickly then you should tell your broker up front that you don’t plan on buying the equipment at the end of the lease. That way they can structure it so that you get to use the equipment while it still has value, but you can return it to the leasing company at the end of your term, or get the newest versions of your particular equipment.
- Finally, make sure that you have truly gone over your budget. You want to make sure that not only can you afford your equipment lease, but you have working capital. As a startup, I’m sure you are well aware of the fact that finding financing is a bit more difficult than for an established business. You must plan with the though in mind that you will not be able to secure a working capital loan until you have at least 2 years time in business. Leasefunders.com has two working capital loans available to startups with good credit (700 and above on all 3 credit bureaus.
Learn more about our startup business equipment lease program by clicking here!
- The New Business Owner’s Guide to Equipment Leasing
- Equipment Leasing Tips For Startup & New Businesses
- Pointers About Small Business Equipment Leasing
Liz Roberts has been in the business financing industry for 20+ years. She got her start in banking, went on to consumer and commercial collections and then onward to becoming a senior credit analyst for several small leasing companies. She has also been a freelance writer for 15 years and has written about business and consumer financing on several blogs. She also maintains a low carb living blog.