Big Capital for your Small Business
If you own a new or expanding small business, you’re probably looking for ways to save money and solidify a place in your field. Leasing business equipment is a smart method for allowing your business to free up capital. Here are some of the main benefits of leasing to consider.
There are many advantages for small business to lease instead of purchase or use traditional loans. Unlike bank loans with fluctuating rates, equipment leasing has fixed monthly lease payments. This allows you to better control cash flow, and plan for your budget and future business opportunities.
You have a few options when your leasing agreement period is over. If there is particular equipment you’ve leased that you believe would be beneficial to own, you may choose to purchase at your term date. If not, you may simply return it. Or, you could extend your lease and continue with monthly payments. Keep in mind that lease agreements are fairly flexible. If there is new or updated equipment available, you should be able to upgrade during your lease.
Preservation of Credit Lines
Using a business line of credit is a good method for having quick cash on hand. Whether you need it now or not, there are many business expenses you should be prepared for. Leasing business equipment allows you to have your credit lines available for other borrowing needs. Acquiring business equipment is typically not an expense you’d want to use for your operating lines of credit. Also, you won’t have to pledge your personal property as collateral in a leasing agreement.
Purchasing equipment generally costs more than leasing it. While you own the equipment you purchase, you’re only paying for its use though leasing. One of the best advantages of leasing is that your payments on the use of equipment are tax deductible. The use of equipment can be written off as a business operating expense. This means that you get the convenience of using the equipment you need, while still saving money. At the end of your lease, you do have the option of purchasing the equipment or returning it. The tax advantage of leasing is especially helpful when a business is just starting or growing.
There are many benefits of leasing, but you should explore all of your options to find the best arrangement for your small business. Keep in mind that a financing company may have customized leasing business equipment plans with even more benefits.