For small to mid-sized construction companies, regardless of the economic and market conditions, financing the acquisition of equipment instead of using cash offers significant benefits while mitigating risks. As well, how you finance the acquisition of equipment should be the result of careful planning based on many factors.
There are several things to consider when searching for the right financing option that best matches your company’s needs, including practicality, cost-effectiveness, type and use of equipment, cash flow and long-term capital and credit demands.
Leasing equipment is a great option if you don’t have the cash flow or credit to buy what you need upfront. Leasing equipment can work for most businesses regardless of how they operate.
With leasing firms such as Vendor Lender you can lease the equipment and construction machines that you need for a selected period of time. There are many of advantages to leasing equipment instead of purchasing them.
- Easy returns:
With leasing you return the equipment when you no longer have use for them. But, if you owned the equipment, it would just sit somewhere waiting to be used. If a piece of equipment breaks down and it’s leased it can be replaced without any problems - Tax write-off:
In most instances businesses can write off the equipment owned by them, but don’t realize that leased equipment can also be written off. This is a two-fold savings, you save money because you have leased it and save money at tax time. - Reduce risk: With equipment that are leased from an equipment leasing finance company the risks are less. The leasing company is responsible for the mechanics of the equipment, ensuring that they are in working order and if anything breaks down, they are responsible to have it fixed. This means that with leasing you don’t have to worry about the machine maintenance.
- New and latest equipment:
With leasing, you are always using the newest and latest in machinery and technology. As you lease equipment for a particular project you know that you will be getting the newest equipment available at that time! This is very difficult to do if you own the equipment, you would be constantly adjusting your finances to acquire the newest equipment. - Keep your capital:
Running a business is difficult under normal circumstances but adding in the need to use capital, that could be put to better use, to purchase equipment is a huge financial investment. Making a large financial investment to purchase heavy construction equipment means that you may not have the cash flow for other areas of your business. For many start-ups and small to medium sized businesses this is a very difficult financial decision. - Flexibility:
With leasing you have the flexibility of finding a specific piece of equipment for a specific job. Leasing affords you the flexibility of getting the equipment you need for a job that you may have otherwise not been able to take on because you did not have a need piece of equipment and could not buy or finance one. - Sale-leaseback:
The concept of sale-leaseback is great one. This is when you sell your equipment to someone and they turn around and lease it back to you. It provides you with the extra cash flow. - Wrapping leases:
With a wrapping lease, you can add more products or equipment to the lease as you need it. If your business is growing and you do not know what or when you will need a piece of equipment this is beneficial to you. A wrapping lease also allows you grow your business quickly. A wrapping lease is an adjustable lease, add new equipment and the payments are adjusted accordingly. - Dollar buyout leases:
This lease is good for big ticket equipment that will not depreciate quickly. When the lease term ends you have the option to buy the equipment for one dollar. How is this possible? It is possible because the monthly payments of the lease are high, which means that you are paying the total value of the equipment during your life-time of your lease. Just make sure that if you enter into this type of a lease that the equipment is not one that will depreciate quickly. - Fair market value lease:
Choosing the best heavy equipment leasing companies will help you get the equipment you need for completing a project. Vendor Lender is one name you can always trust!
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