Leasing is inevitable when it comes to small businesses that can’t purchase everything they need upfront. If you are a business owner and are thinking of renting equipment, this article is for you. It addresses everything you want to know before renting equipment.
What Is Equipment Leasing?
This is a process where small business owners can rent equipment instead of buying. Business owners can only rent equipment for a specific period, and it comes in handy when they can’t afford to purchase theirs.
How Does The Equipment Lease Work?
Equipment leasing works like any other form of agreement. The moment you accept to rent the equipment from the owner, you enter into an agreement. The owner crafts an agreement with the details of how long you are renting the equipment, how much to pay, and the consequences if you break the agreement. You can use the equipment through the lease period until the lease period expires when you are supposed to return the equipment.
Benefits of Equipment Leasing
Many of the equipment owners don’t ask for a down payment
Leasing can give you the most recent equipment, since you will go to the owners with current models of the equipment needed.
If you need more advanced equipment, you can get it without selling your existing equipment.
Owners of the equipment can take advantage of the tax credit and deduct your payment as a business expense depending on the lease.
How to Get Started
Leasing is inexpensive compared to buying. Know what you can afford and go with what fits your pocket as you work your way up. If you are leasing for the long term, like three years or so, do the math and see if getting a loan can be more beneficial to your business. If your business is rapidly growing, leasing can always be the better option. Before you decide whether to buy or lease, consider the rate of technology growth in the industry to avoid obsolescence.
Types of Equipment Leases
1. Operating Lease
An operating lease allows a company to use the equipment for a specific period without owning it and the lease period is less than the life of the equipment.
2. Finance or Capital Lease
In a finance lease, the leaser owns the equipment, and the lease itself is considered an asset and increases the leaser’s company holding and the liability.
Leasing has always been the way when one can’t afford to buy the equipment wanted. If you need commercial funding to facilitate your equipment renting dream, Rushview Commercial Funding is here and ready to listen to you.