The Differences Between Equipment Leasing & Equipment Financing?

funderscorner | Funders Corner

A common challenge for small businesses is needing new equipment but, not having enough cash to buy it. This leaves you with two options: equipment leasing and equipment funding. Before detailing the distinctions between the two, let’s re-define the next term so that it is better to understand. Equipment financing is simply another way to make reference to a small business loan that is used to buy equipment. Most business funding solutions may match the goal, and the one which is most beneficial for you usually is determined by a number of circumstances. However, be confident: Because of companies like United Capital Source, small businesses seeking to purchase new equipment can gain access to the most effective business loan because of their needs and cash flow requirements.

We are able to likely help you find out what type of business loan is more suitable to your needs. The true decision is whether your desired investment is worthy of a loan.

What Is Equipment Leasing?

Leasing equipment is like renting an apartment, except you typically don’t have to place hardly any money down. You’ll only have to make fixed, monthly repayments before expiration of the lease arrangement. These repayments will likely be lower than the monthly payments of an traditional business term loan. If the equipment require maintenance introduced being leased, the organization that leased the equipment for you is in charge of the cost.

Once the lease contract runs out, you will be able to restore the lease, eliminate the lease, or perhaps choose the equipment for a cost according to current market requirements. There is a good chance that in the long run, leasing will cost you more than buying. But this drawback might be outweighed by benefits that, depending on your industry, may be more important than saving cash.

What Is Equipment Funding?

Equipment financing or small business loans created for purchasing equipment, are used by dozens of markets. Examples include auto shops, metal manufacturers, restaurants, dental practices, or landscaping companies. Since these market sectors are not alike, we suggest various business loans with conditions that won’t obstruct cashflow. While a restaurant is normally an ideal candidate for a merchant cash advance, a landscaping business may be more suited for accounts receivable factoring. Oftentimes, the determining factor is how the equipment will have an impact on revenue and exactly how long it will require to the increase to occur.

Clearing Up A SIGNIFICANT Misconception

Proponents of leasing may let you know that a big edge is devoid of to undergo the procedure of taking right out a business loan. However if you utilize a business such as United Capital Source, it could take only a few days for funds to reach your money, no matter which business funding program you are given. At the time of your payment, your questions would be replied to immediately with an individual email or phone call.

In reality, taking out a small business loan with United Capital Source will almost certainly be less laborous than taking right out a lease. The leasing business will likely request you to complete tedious documents, and the lease conditions tend to be non-negotiable. Small business loans from United Capital Source, on the other hands, require nominal agreements, and our conditions are being among the most flexible on the market.

Advantages Of Leasing

Leasing might be a better option if your industry requires anyone to consistently use up-to-date technology. Instead of purchasing brand new equipment yearly or so, you would be able to go back the outdated equipment at the end of your contract and open a fresh lease with the more complex version shortly after.

One other huge benefit for leasing is that it’s usually tax deductible. But you should not believe this applies to you without consulting with a tax consultant.

Advantages Of Funding

It’s recently been suggested that purchasing is a lot cheaper than leasing. Some businesses select the latter option since they can’t produce much capital at that specific time. But unlike traditional business lenders, United Capital Source is capable of authorizing many business loans when earnings is down or constantly ever-changing. So, even though you are in your slow season, you may still gain access to programs like merchant cash advance or standard working capital loan.

The maintenance facet of leasing is also a double-edged sword. You must rely on the leasing company to repair the equipment, and who realizes just how long that will need? There’s little or nothing you really can do to make sure they are work faster.

And exactly like leasing, substantial tax deductions may be allowed for large equipment purchases.

We MIGHT HELP You Decide

Not sure whether you should buy or lease? That’s what we’re here for. Business financing professionals from United Capital Source are pleased to advise you on this decision. Take into account that if you would like to use your desired equipment for a long period, buying is going to be your best bet. You will finally gain another property that may help you obtain a second, larger business loan in the foreseeable future. Besides, if you’re already this concerned about buying or leasing, it’s probably because you understand you’ll need a far more expensive part of equipment eventually.