Equipment financing can equip your business for success by keeping working capital in your hands. Paying cash for a piece of machinery requires paying in full before the machinery is productive and able to contribute to your revenue. Whether you choose to finance equipment with a loan, rent equipment with a lease, or create a custom financing option, there are plenty of ways to avoid a large cash outlay.
Equipment financing enables you to create customized payment schedules, manage cash flow effectively, and secure the materials necessary for your business operations.
Businesses from every industry and service sector utilize financing, with the most commonly financed types of equipment being in industrial/manufacturing, transportation, information technology and technology services, construction, and agriculture.
LOANS OR LEASE?
Depending on your requirements, you might opt for an equipment loan or lease.
Companies of all sizes, from large corporations to small family-run businesses, can benefit from these financing options. Both options allow you to acquire equipment immediately, which helps in generating revenue as you start making manageable, periodic payments.
Generally, a loan is more suitable if you can afford a down payment and intend to use the equipment long-term. On the other hand, a lease might be preferable if you lack upfront capital or have less than 2 years in business.
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ADVANTAGES AND DISADVANTAGES OF EQUIPMENT FINANCING
For numerous businesses, equipment financing might be the ideal route for equipment acquisition. However, it's important to weigh the advantages and disadvantages before proceeding with this option.
ADAVANTAGES
Ownership of the equipment: Unlike leasing, you will completely own the equipment after the financing term ends.
Option to sell the equipment: You can sell the equipment if needed to recover part of your expenses.
Tax benefits: Your business could potentially deduct the interest payments on the loan and the depreciation of the asset from its taxes.
DISADVANTAGES
Initial down payment: Equipment financing may necessitate an upfront down payment, which can be substantial depending on your creditworthiness and/or the type of equipment being purchased.
Higher monthly expenses: Financing could result in higher monthly costs compared to some leasing options, with potential to have high-interest rates on the loan.
ADVANTAGES AND DISADVANTAGES OF EQUIPMENT LEASING
When considering an equipment lease, it's important to understand the advantages and disadvantages to make the best decision for your business.
ADVANTAGES
Lower monthly payments: Leasing agreements often offer more affordable monthly payments than financing agreements, allowing immediate access to the equipment you need.
No down payment: In contrast to equipment financing, leasing typically doesn't require an upfront down payment, potentially saving you significant amounts in the short term.
Access to updated equipment: Leasing is advantageous if your business needs to frequently update or replace its equipment.
DISADVANTAGES
No ownership: With leasing, you do not own the equipment at the end of the lease term, although you might have the option to purchase it, often requiring a significant final payment.
Security deposit: Some leases might require an upfront security deposit, which could be forfeited if the equipment is not returned in good condition.
Tax benefits: Unlike financing, where you can usually deduct loan interest and equipment depreciation, leasing may not offer similar tax write-off benefits.
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RYONET HAS OPTIONS
Less Than 2 Years in Business?
If you’re new to the industry or your company is less than 2 years old, you’ll have a greater likelihood of being approved for either short-term installments offered through ShopPay or 1-4 year terms leasing through Clicklease.
Established in Business (2+years)
If you’ve been in business for 2+ years, you have more options to choose from in terms of financing. First Citizens Bank offers a variety of Equipment Financing Agreement options with very competitive market rates.