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What is Equipment Leasing

When you choose to lease equipment, you are basically asking for a loan on the equipment you need for your business. The lender is the actual owner of the equipment and they rent it to you for a period of times at a flat rate. Once that term is up, you can either purchase it, renew the lease agreement, or return the equipment.

When is Equipment Leasing Beneficial

It is often advantageous for a new start-up company to consider equipment leasing to begin its business. You may be purchasing your items with your own personal credit and be limited on what you can acquire. If you do not have revenue yet, you may not be able to afford big-ticket items that can cost hundreds of thousands of dollars.

On the other hand, you may want to choose equipment leasing even if your start-up costs are less than $100,000 because you may not have the personal credit to purchase more than that. Monthly payments can be more affordable than paying out a large sum upfront before you have any income for your business.

Equipment leasing can also be used to finance other costs associated with buying equipment. This includes installation of the equipment and training to use it. This can save your company quite a bit of money upfront.

Why Consider Equipment Leasing

If you are a new business and have not proved yourself yet, banks may be hesitant to lend you the money for an outright purchase. It is often easier to obtain the credit needed for equipment leasing than for buying. The interest rates may be slightly higher but the cost can be worth it to obtain all of the equipment you need to get started.

If you need equipment leasing for less than $100,000, the process is often quite simple. In fact, it can be almost as easy as applying for a credit card. However, for purchases larger than that amount, you may be required to provide more detailed records of your business. This could include such things as your personal financial statement and a business plan for your company. It is important to check with the company you plan to use for equipment leasing to find out their requirements.

When Equipment Leasing Is the Way To Go.

If you are just beginning a new business, you may be adding up the cost of getting started. Equipment leasing is one of the biggest expenses you will incur in your first days as a company. In fact, you may end up trying to decide on what you can do without if you run out of money. However, you may want to consider equipment leasing before you begin your purchases.