by Simon Malinski and Doug Alverson
Depending on which industry your business is in, it may need different equipment to get the job done. While this equipment is necessary for operations, it can also get expensive very quickly.
As equipment costs add up, exploring an equipment finance loan could be a good next step. This is a specialized financial solution designed specifically for business owners with expanding equipment needs. These loans can be used to finance vehicles for a fleet, manufacturing machinery and a variety of other business-related items, such as:
Agricultural or farming equipment
Medical imaging equipment
Restaurant ovens and ranges
IT equipment, servers and software
Let’s take a closer look at how an equipment loan could benefit your business.
Lower upfront costs
With equipment loans, you can spread the cost of purchasing equipment over a period of time, rather than paying for it all upfront. This helps conserve cash flow and frees up capital for other immediate business needs.
Work with an expert
Lenders that offer equipment loans will often have equipment finance specialists who can help navigate you through the process. They understand the ins and outs of these specialized loans, ensuring that you access the right solution for your business.
Customized payment plans
Equipment finance providers offer a variety of payment options to fit the unique financial needs of each business. This allows you to choose a payment plan that works for your operation, whether it’s a fixed monthly payment, a seasonal payment plan or something else.
Convenience and speed
In many cases, an equipment finance transaction can be executed and completed in less time than traditional financing alternatives. Lenders may also not require an existing relationship, which helps streamline the application process. If a preapproval option is available, this can speed up the process even further, allowing you to immediately take advantage of equipment sale opportunities.
Equipment loans can provide 100% financing while other options may require an initial down payment. A portion of “soft” costs that come with buying equipment can also be included in the financing, including delivery charges, interest charges on advance payments, sales or use taxes, installation and training costs. These costs are not usually included in other financing methods.
Tax depreciation benefits
Section 179 of U.S. tax code1 allows qualifying businesses to deduct the cost of some equipment, whether financed or purchased directly, as an expense instead of capitalizing and depreciating it over several years. This allows businesses to take advantage of a more immediate tax break. It’s best to consult with a tax advisor on this topic.
The best financing option for your business depends on your unique financial situation, but in general, an equipment finance loan is a great choice when you need to make equipment purchases, especially if you need to do it quickly.