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How Equipment Leasing Can Benefit Your Small Business

Are you a business owner trying to decide whether you should buy or lease the equipment you need to run your business? In some cases, it is a better investment to outright purchase equipment for your business, especially if you are buying equipment that will not depreciate in value or that you will not need to replace. In other cases, leasing makes much more financial sense. 

Leasing equipment can be beneficial to your business for several reasons. From cash flow improvements to helping your company meet long-term business goals, check out some of the benefits of equipment leasing.

Preserve Working Capital

The primary benefit of leasing equipment as opposed to buying outright is lower initial costs. Leasing allows your company to acquire all the equipment you need without completely draining your funds to taking out further loans. Typically, you will not need a down payment for an equipment lease, which is often not the case when purchasing equipment. 

Your payment plans will follow structured increments, meaning less of an impact on your regular cash flow. Especially for new businesses, having the available working capital to cover day-to-day expenses is critical. Equipment leasing saves your working capital for expansions or unexpected costs. Finally, you’ll be given structured monthly line items to help plan your budget and develop long-term goals. 

Equipment Ownership is More Flexible with a Lease

Equipment leases give a business the opportunity for flexible terms, not just one exorbitant sticker price. A lease is typically much easier to obtain and manage than an equipment loan. The flexibility of a lease gives you the option to extend payments and lessen your monthly bills should you need to focus cash flow on other areas of the business. They are easier to pay off and can be the difference in getting the equipment your business needs or having to settle for a less efficient alternative.

Besides ease of payments, leasing equipment also gives a business much more flexibility to stay current. Saving money on expensive tech gives your company more opportunities for upgrades as they become available. This way, you’ll prevent your equipment from becoming outdated and will have access to top-of-the-line equipment in your field. With the ability to take on a short lease, you also won’t need to worry about depreciation in outdated technology. The ability to take on a short lease will ensure that you’re always at the cutting edge in your industry. Finally, without that initial high purchase price, there is less pressure to sell the equipment and regain some of your investment.  

Capitalizing on Tax Benefits 

One of the best benefits of business equipment leasing is that your payments are likely tax-deductible. Lease payments can usually be deducted as business expenses on your tax return, reducing the net cost of your lease. Of course, tax rules and regulations can be tricky depending on the equipment you use, the industry you work in, and other underlying factors. Before you move forward with a plan of deducting costs, check with your tax advisor.

At Falcon National Bank, our equipment finance division is a great fit for businesses in a variety of industries. These can include manufacturing, healthcare, agriculture, construction, transportation, and landscaping companies, among others. Learn more about our available opportunities on our website.