Grow your business quickly when you are short on cash. Learn more about leasing equipment to expand your venture’s presence on a shoestring budget.
What Is Business Equipment Leasing About?
Business equipment leasing covers complete offices, heavy machinery to computers. You can lease just about anything for your venture through this strategy. If you need certain tools for your business going this route can benefit any business low on cash. Snagging this life line helps grow your business during lean times.
How Can You Lease Business Equipment?
A lender purchases and owns equipment which is then rented out to a business entity at a monthly rate. The leasing period lasts a specific number of months. The business has the option to purchase the equipment at fair market value at the end of the lease. Other options include returning the equipment, continuing the lease or leasing new equipment. If you do decide to purchase the goods you can also buy at a predetermined or fixed amount.
Advantages of Leasing
There are many advantages to equipment leases.Skip paying up front costs and secure needed equipment by going this route. Cash strapped business use leasing to get essential goods to grow their ventures. Lease payments can also possibly be deducted as a business expense if you meet certain criteria. This can be beneficial to any entrepreneurs needing extra cash flow. Since the leases are not bank loans these lines of credit stay freed. Having access to a free line of credit serves as a lifeline to growing ventures.
Investing in a large office space or computers for your business can be an expensive affair. Buying might be out of the question for new or struggling businesses. Going the lease route builds your profits and expands your venture quickly during leaner times.
Disadvantages of Leasing
Startup businesses face a stiff challenge if they go the business leasing route. Due to the volatile, unstable nature of startups the owner will usually be asked to put her or his personal credit on the line to secure the business equipment lease. As most startups are built by new entrepreneurs this financial commitment might be difficult to make. You are committed to keep the equipment for a set period of time during the lease even if you no longer have use for the goods. Being stuck with useless or improper equipment can form a drag on your venture.
You also must pay a higher price over the long term.
Nitpick leasing terms. Cover yourself in the casualty insurance department in case equipment is damaged. Assess your responsibility in terms of handling equipment repairs and paying personal property tax. If you can look out for yourself and your business expect to be generating strong cash flow in no time.