There are many reasons you might choose equipment finance rather than paying up front out of your business’s coffers. Here are four of the best:
Some types of equipment finance like equipment leasing and sale and leaseback are more tax efficient than buying outright. That’s because when you lease an item it’s a monthly expense rather than an asset sitting on your balance sheet.
Easy to budget and manage
Equipment finance in most of its forms gives you predictable payments so you can spread the cost over time. That means that managing cashflow is that little bit simpler, and you can focus on running the business.
Flexibility and scalability
If you finance one piece of equipment and your business starts growing, you can get more items quickly without a large outlay. Whether you’re ramping up production using a new piece of state-of-the-art kit, or getting hold of extra vehicles for expanding logistics, equipment finance is a great way to grow your business.
Access to other lines of credit
One of the often forgotten but important reasons to finance equipment rather than buy it outright is access to other lines of credit. For similar reasons as tax efficiency, equipment finance is usually a predictable monthly expense, which means you can get another type of business finance alongside it. This is a huge advantage for some businesses — you could get the equipment you need, and take out a business loan for marketing, for example.