Equipment leasing for small businesses is one of the few ways to save on start-up costs. The majority of equipment can be leased, and whether or not you choose to purchase the materials depends on your budget and office needs. If you are starting off small as an entrepreneur and you’re in need of only one computer then it makes far more sense to purchase equipment. If you have an office with multiple employees in need of more computers you may want to look into the leasing process.
The majority of start-up companies are interested in leasing equipment and there are thousands of firms that offer the same programs. The advantage of leasing/renting is lower monthly payments, no loans, fixed monthly payments, tax benefits and having immediate access to the equipment needed for your business. The only downside to leasing is that you are taking a risk. You may end up paying a higher price for long-term use and if your business struggles you are committed to the amount of time you have signed the contract for.
Most companies look at approximately how long a customer needs the equipment and whether or not they put the materials into a single contract. It’s important for your budget that you look into what the total payment cost is going to be in regards to the term options. Before you decide on leasing equipment from a company consider asking your finance source if they are the direct funding source, the reason for this is to help set your expectations accordingly. Look into how long they’ve been in business and don’t be hesitant toward going through reviews from previous customers who have used their services in the past. It’s best if you work with financing companies that have built and maintained a solid reputation.
As the customer it’s your responsibility to go through the terms and conditions regarding the entire lease. Does the company provide insurance and do you know who is in charge of paying the personal property tax? Be aware that every lease contract offered is different – it’s your job to study the agreement and ensure that you fully understand the given terms. Some companies have “evergreen” clauses in the contracts that makes the lessees pay indefinitely past the term of the initial contract. Play it safe by comparing interest rates and choosing one that is favorable towards your budget. If you want to save money with start-up costs the best decision would be to find a company that specializes in leasing equipment.
For Startup Companies
Startup businesses don’t have much of a credit history, which limits the financing amount they qualify for and automatically groups them into a high risk category. In cases of startup companies, the main and possibly the only thing a lender goes by in the personal credit history of the principal. It is recommended that prior to starting up a new business venture that you review your personal credit to ensure that anything derogatory on it has been completely resolved. There isn’t only reduced cash outlay but leasing that can save you time in finding someone who offers credit. It’s important for companies to stay in touch with emerging technology because it plays a crucial role in business and marketing. With a short term lease you can evaluate whether or not the equipment is suitable toward your business needs. With leasing, there are different tax advantages available and it is recommended that you discuss such with a tax advisor.