There are many reasons why businesses use equipment leasing to finance their business. In the past, this form of financing was not as well known as it is now. When I would talk to clients about their equipment financing options, many had never even heard of equipment leasing!
Some common myths about equipment leasing:
Myth: Equipment leasing is only open to well-established businesses.
Fact: Equipment leasing is open to ALL kinds of businesses. From startup to well established.
Myth: Equipment leasing requires the business owner to have good personal credit.
Fact: Equipment leasing is extremely flexible. Unlike an SBA loan where you need a minimum credit score of 620. With equipment leasing, you can have a very low credit score. We have financed clients scoring it the low 500s!
Myth: If you lease your equipment you won’t “own” it.
Fact: There are many types of equipment leases and you can do a lease to own if that is what you want to do. Some of our equipment lease programs are structured in such a way that at the end of the lease term you pay $1 and the equipment is yours.
But another benefit to leasing is if the equipment has become obsolete, or you need to upgrade to one that has more features, you can structure your lease so you give it back at the end of the term and you can easily get a new piece of equipment.
Why is equipment leasing such a good option for start up businesses?
Equipment Leasing Saves your working capital
Equipment leasing is great for startups trying to preserve their working capital. Let’s face it. Buying equipment is expensive. For many new businesses, it requires that the spend more than 1/2 their operating capital to get the equipment they need.
But with equipment leasing, they can get the equipment they need while only paying first, last payment and processing fees. A small fraction of the cost the cost of the equipment.
Equipment Leasing Has An Easy Approval Process
Whenever a new business opens their doors, the goal is to do so as quickly and cost-effectively as possible. With equipment leasing, a typical lease transaction can get approved and funded within a few days of the application being filed with the leasing company. Sometimes (based on the dollar amount of the lease) it can be just a few hours!
Equipment leasing also has extremely flexible credit requirements. Depending on the equipment leasing company you use, you will find that business owners with A – D credit can be approved for an equipment lease.
Equipment Leasing Can Save You Money On Your Taxes
There are huge tax advantages for startup businesses that choose to lease their equipment One being that you can actually deduct lease payments for your taxes. There are tax breaks available for most types of equipment leases.
Whether you are going to be returning the equipment at the end of the lease period or purchasing it in full, you will still be able to deduct all of the lease payments that you made during the process. You can read more about the tax benefits of equipment leasing here, Make sure you talk to your tax advisor to make sure you get all the tax benefits you are entitled to!
Read more about our Equipment Leasing Programs For Start Up Businesses by clicking here.
Article updated 12/4/18 by L. Roberts
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Leasefunders.com specializes in providing equipment lease financing for start-up businesses and businesses with bad credit. Hard to fund deals are no problem for us! Let our 21 years of experience in business financing help you to get the financing you need.