Insiders Guide

The Insider’s Guide to Small Business Equipment Leasing

How to make sure equipment leasing is the best option for your business.

Eight out of ten businesses in the US now lease some or all of their equipment. But, that doesn’t mean equipment leasing is the best decision for your small business.

In this short article, we’ll cover the 3 key questions you need to ask in order to discover if small business equipment leasing is the right solution for you.

Question #1: Is it important for our business to have access to current technology and equipment? One of the chief reasons small businesses opt to use equipment leasing is so they can consistently update their technology. If gaining efficiencies through using modern equipment is important to your business, then leasing equipment may make sense. On the other hand, if your company will not see a real benefit from having newer equipment, whether it is computers, medical or heavy machinery, then leasing may not be as pertinent an option.

Question #2: Will leasing equipment help improve our cash flow and financials? The monthly payments you would make on a lease are considered an expense. Whereas equipment you purchase using a loan is considered a debt. In addition to this, when you choose to lease instead of purchase, you free up capital so it can be used for other operating expenses. Conversely, if available funds are not a problem, purchasing equipment outright can save you money in the short term.

Question #3: Do we need to procure equipment sooner or later? Using equipment leasing to grow your small business is faster and more convenient. Credit history, years of banking records and a detailed business plan are not required. With equipment leasing there are less hassles and fewer hoops to jump through compared to getting a traditional loan. Also, a lease allows you to incorporate the expenses of delivery, set-up and maintenance into the overall price. Then again, if you are an established business with years of stellar banking history, a traditional loan may provide more attractive interest rates.

As you can see, there are pros and cons to both equipment leasing and procuring a traditional loan. The key is to clearly weigh the options and decide which is best for your small business. The important thing is that you get all the facts so you can make a smart decision.

A decision that will give your business the power to grow and the flexibility to thrive in today’s competitive business market.