A Guide to Equipment Financing
You will need equipment financing in your business is in need of capital to buy new machinery for producing products. If commercial equipment financing is not available, then many businesses will not be able to meet customer’s needs. Here are some of the benefits of equipment financing.
You can improve your cash flow if you avail of equipment financing. Perhaps you don’t have enough cash on hand to sustain regular expenses like overhead costs, new opportunities, unexpected expenses, and many other costs. You will then get as much cash in-house with equipment financing. If you want to purchase or upgrade the equipment you don’t have to set aside a portion of your own money to buy one if there is equipment financing. Your cash flow will then be accessible and improved with equipment financing.
You don’t have to use any other lines of credit with equipment financing. Your working capital is conserved with this type of financing.
There is a business hedge against inflation risk if you get equipment financing. It makes little financial sense in terms of inflation if you use your money to pay a large down payment on equipment or if you pay for equipment in cash. You can make a series of payments over time with equipment financing. The devaluation of these payments are absorbed by the lender over the course of the financing term.
Equipment financing does not contain any hidden charges that are often found with traditional loans. The hidden charges on traditional loans are usually found in the fine print of the contract. The financing style of equipment financing is completely transparent.
Full financing is available with equipment financing. You don’t need to pay any down payment with full financing. Initial down payment is required with traditional lending.
If your equipment is outdated or unnecessary for operation purposes, then there are equipment financing companies that would dispose of them. So instead of figuring out a lawful way of disposing of old equipment, with this type of services the burden from the borrower shifts to a focus on improving the efficiency of his operations.
The interest rates of commercial equipment financing are more favorable than other types of financing.
The way equipment financing is structured reduces your tax burden. The value of tax benefit is included in equipment leases that are tax-oriented.
Conventional lenders have strict repayment programs with little flexibility. There is a great difference with equipment financing. The exact opposite is actually true with equipment financing. There is flexibility with equipment financing. Even without any down payment, you can arrange full financing of equipment. This is beneficial to organizations that value cash flow.
These are just some of the benefits of getting equipment financing.