Is Equipment Leasing Right for Your Business?

It can be difficult as a new business owner to apply for a bank loan, especially if you do not have a business credit history.

Equipment leasing is an excellent option to help you obtain the necessary equipment, vehicles or devices required for your business. Both start-ups and established companies can qualify for an equipment lease.

Equipment leases are different from equipment loans. The two options differ mainly in terms of ownership. With leasing, you do not own the equipment. Instead, a lender buys equipment and then rents it to you for a monthly payment.

The expense associated with specialized equipment can add up quickly. It’s usually impossible to purchase everything you need and pay in full, using your capital. A lease is generally a better choice if your company doesn’t have money to put down or only needs the equipment for a particular project or event.

Choosing a lease can also help you avoid delays and get your business up and running sooner than with an equipment loan.

Equipment leasing helps cover the cost of your needed physical assets. You can lease a variety of items, including:

  • Vehicles
  • Computers and other IT equipment
  • Machinery
  • Stoves, ovens and refrigerators
  • Construction equipment
  • Office furniture
  • HVAC units

Some advantages of this type of specialized financing are the following:

  • Leases do not require you to have a down payment or collateral.
  • The application process is easy.
  • The lessor is responsible for repairs.
  • Most lease agreements have flexible term options.

Your company will pay rent for the equipment for a specified amount of time in a lease, known as a leasing term. At the end of the agreement, you will return the equipment, purchase the equipment, or renew.

Leasing is cost-effective because no down payment is required. Businesses make payments in regular installments for the use of the equipment. Lessors often offer flexible repayment terms to match your company’s financial capability. This option is ideal for small business entrepreneurs who have a limited budget.

Before obtaining a lease, business owners should familiarize themselves with any prerequisites of the leasing company. Preparing paperwork in advance saves time and helps the lessor see you are organized and capable. You will also need to select a leasing company that caters to your specific kind of business.

Suppose you have start-up costs to deal with, little money to put down or require items that will quickly become obsolete. You will want to consider equipment leasing for your business.