You need to add equipment to your business but you don’t want to tie up your capital. Equipment
finance is available with little or no down payment, in both lease and loan options. The approval process
is fast, the payment schedule is affordable and there are potential tax advantages.
What is equipment financing?
Most business needs equipment. For some, it’s as simple as a smartphone and tablet computer, for
others it’s a 12-burner range and a box truck, or a full suite of dental tools and an X-ray machine. Some
equipment can be used for many years, while other items might be obsolete in 24 months. Some must
be acquired new, while others can be purchased used from an auction. Some can be purchased outright,
while others can be leased. But no matter what you need or the capital you have on hand for it, there
are ways to get equipment–and finance it.
At the end of 2015, Congress passed a bill that should encourage more small businesses to spend on
equipment. Legislators made the so-called Section 179 deduction permanent, which will allow small
businesses to write off up to $500,000 in qualifying equipment in the year in which it is purchased.
How can I use equipment financing?
You can use equipment financing to buy or lease equipment, whether that equipment is new, old or
New equipment gives you the opportunity to get the latest technology and a full warranty. When you
buy your equipment, you gain an asset that you can sell in the future–and bank the benefits of that
sale–or use as collateral for the next stage in your business’ growth.
If the technology in your industry changes frequently, leasing can help you get current equipment that
you will hold onto only until the next upgrade appears. You will pay for your leased equipment in small
monthly amounts, which can free up capital for other purposes. While it will cost you more to lease a
piece of equipment than to buy it, some lessors offer a purchase option that applies a portion of your
lease payment towards the purchase price.