Equipment leasing affords businesses many opportunities and advantages—from tax incentives to flexible rates that are much lower than loan payments.
However, there are a number of easily avoidable mistakes that cause business owners to lose out on several equipment leasing benefits.
Depending on your industry, equipment leasing provides distinct advantages. If you are in the medical industry, equipment leasing allows your organization to quickly and effortlessly upgrade MRI machines, CT scanners, and X-ray equipment while maintaining cash flow and avoiding a large down payment.
On the other hand, if you run a startup tech-based business, equipment leasing allows you to concentrate on maintaining your company’s cash flow without floating loan payments that might further cash-strap your organization.
Providence Capital Funding, Inc., is committed to educating business owners on the benefits available to them. In that spirit, we’re sharing the top 4 most common mistakes in equipment leasing.
Equipment Leasing Mistake #1: Not Conserving Cash Flow
Equipment leasing doesn’t require you to have a large down payment. This allows you to maintain your cash flow and keep your business on the cutting edge without taking a financial hit upfront.
Equipment Leasing Mistake #2: Missing Out on Tax Benefits
Business owners are not always aware of the tax benefits inherit with equipment leasing. When you choose equipment leasing, it shows as a lease expense on your balance sheet, rather than a purchase, which enables certain tax incentives. We suggest you ask your tax professional about the specific benefits equipment leasing will bring your business.
Equipment Leasing Mistake #3: Signing Contracts with Floating Rates
Equipment acquired through loans or lines of credit often come with floating rates, wherein your payback schedule will change month by month. In addition, to acquire a loan through a bank, most institutions require extensive financial information and never take your individual situation into consideration Lines of credit are often used for working capital, and tying the line for equipment purchases can strain your business cash flow.
To add to that, acquiring equipment through bank loans involves longer wait times for approval; whereas, most equipment leasing can be approved in as little as 24 hours.
When you work with an accredited equipment leasing company, you will have fixed payments rather than a floating rate. A floating rate can dramatically strain your cash flow when rates are on the rise. A fixed rate is more flexible, and is designed to meet your budget and the needs of your business.
Equipment Leasing Mistake #4: Taking Leasing Options That Only Factor in Credit
While credit reports are a part of the equipment leasing approval process, there is much more to factor in. At Providence Capital Funding, Inc., we take the “make sense” approach that also considers your business as a whole.
Many equipment financing companies use only computer-generated algorithms that look at financial documents, not your unique situation. To avoid this scenario, work only with equipment leasing companies who have a real expert perform an in-depth analysis of your company, so that you get approved for the amount you need faster and more efficiently.
Efficiency is a quality that you need to streamline the ideal equipment leasing solution for your business. With a company who abides by a speedy yet comprehensive approach, you are sure to find equipment leasing that meets your needs.
At Providence Capital Funding, Inc., we offer fast equipment leasing that allows you to take advantage of benefits without losing time, shuffling through financial paperwork, or waiting for approval on equipment leasing quotes. In fact, we’ll send you a free quote within 30 minutes.