In every business, having access to the right equipment at the right time is crucial for success. Remaining competitive often requires regular upgrades, expansions, and big-ticket purchases; however, these solutions can be costly to implement.
One way to gain that competitive edge is by equipment financing. Getting a loan for heavy machinery can provide a host of advantages for business owners in various ways.
Consider these seven benefits of equipment financing:
- ACCESS TO CAPITAL
An equipment loan provides a cash influx that allows business owners like you to buy the machinery you need to get the job done. In most instances, this is a fast and straightforward process, depending on your creditworthiness. A loan can help you free up other working capital that you can reinvest into your company through payroll, marketing, or different business needs. With relatively instant access to the money, it can also help reduce downtime by enabling employees to get to work faster.
- FINANCIAL FLEXIBILITY
Financing machinery provides excellent financial flexibility for a company. Instead of the company having to part with significant capital expenditure, leasing payments are typically smaller and more manageable monthly. Financing won’t disrupt cash flow since only a small down payment is usually required. Small- and medium-sized businesses can benefit from not relying on significant upfront payments for heavy equipment.
- STAY ON THE CUTTING-EDGE
Equipment financing can also help you stay up to date on all the latest technological innovations and advancements available for your machinery. Upgrading equipment frequently can be a burden financially, which could cause some businesses to fall behind competitors. Equipment financing can make heavy machinery more affordable and offer you the means to acquire the latest and greatest tools on the market.
- ADAPTABLE TERMS AND CONDITIONS
The terms and conditions of equipment financing are typically developed to align with the unique needs of your company. This means that the terms and conditions for equipment financing can be secured in a way that best fits your business, such as extending the contract term to reduce monthly payments. Then, when the total principal plus interest is spread across the predetermined period, you can have a better understanding of your long-term budget.
- TAX SAVINGS
As a business owner, it’s important to understand the advantages of certain tax breaks available to your company. In certain circumstances, companies that finance their equipment can use Section 179 of the IRS tax code to deduct the full cost of equipment. In addition, businesses can typically deduct the interest paid in the United States. Be sure to review your tax savings options with your accountant to see if this is applicable.
- BETTER BUSINESS OPERATIONS
Having the equipment you need on hand and ready to work can enable you to generate more revenue by bidding on more projects, adding new customers, and in some cases, securing more significant deals that require more equipment.
- FREE UP OTHER LINES OF CREDIT
A traditional business term loan is typically one of the first options a business owner considers when quick access to capital is needed to jump on a revenue-generating opportunity, bridge a slow period, or purchase equipment. However, having your line of credit tied up by a piece of machinery with your bank can limit your ability to draw upon that line of credit for other urgent or unexpected needs. Financing the equipment through the manufacturer can help to free up that line of credit, leaving it available for different business needs.
Equipment financing can be an excellent option for companies of all shapes and sizes to help them grow their businesses and keep them flourishing. Contact us at AFP to learn more about how your business can benefit from equipment financing and available options.