Commercial Equipment Financing

If the term “commercial equipment financing” is new to you, it’s a relatively simple concept. Simply put, commercial equipment financing is a method of extending capital to businesses for the purpose of acquiring equipment. Financing methods include but are not limited to leasing, loans and sale-leasebacks (where the collateralized existing equipment is used to raise cash for additional purchases). In short, commercial equipment financing can assist your business in financing up to 100% of the new or used equipment you need for your business.

Financing Equipment

• Acquire a needed asset while preserving your capital.
• Gain flexibility in capital asset inventory management.
• Develop additional cash flow management strategies.
• Better manage technological advances.
• Ability to expense the cost so that it can be passed through to another party.
• Preserve capital rations through off-balance sheet treatment of expenses.

What kinds of Businesses Finance their Equipment?

• Companies that need long-life, business essential assets.
• Corporations – both public and private.
• All industry sectors.
• Governments and related organizations including hospitals and educational establishments.
• Middle market businesses that are underserved by more traditional financing solutions.

Equipment Financing & Leasing:

Equipment Financing:
Equipment financing is a loan taken out by your company for the purpose of purchasing equipment necessary to grow your business. The loan is secured by the equipment and is a good option when you as a business owner don’t want to use your existing capital to purchase the equipment.

Benefits:

• 100% financing of equipment cost.
• Flexibility in structuring loan to work with your current cashflow.
• Ability to refinance existing equipment for working capital needs.

Equipment Leasing:
Equipment Leasing is, in essence, an extended rental agreement under which the owner of the equipment (the finance company) allows the user to operate or otherwise make use of the equipment in exchange for periodic lease payments. When the lease matures, the user may have the option to purchase the equipment for its then fair market value, renew the lease, or terminate the agreement and return the equipment to the owner.

Benefits:

• Off balance sheet financing allows for the deduction of depreciation and interest by the company.
• Flexibility in lower periodic payments helps cash flow.

The answer depends on your unique situation. Leasing is a good option if you are a business that has limited capital or who needs equipment that requires upgrading every 3-4 years, as it preserves capital and may provide you more flexibility. Financing the equipment can be a better option for established businesses or for equipment that has a long usable life for the company.