Businesses can tailor financing solutions with a reputable lender to suit their business and equipment requirements.
FREMONT, CA: Companies have long used equipment financing to grow during volatile economic cycles. Choosing the right lender is essential when weighing your options, so you'll be able to structure flexible financing solutions that fit your business. Many companies still prioritize capital equipment despite today's economic volatility, but financing it is more costly. Whether companies lease, pay-per-use, or get a loan, they have many options.
These companies may want to consider the following options:
Leasing: It is common for businesses of all sizes to leverage equipment leasing, largely because the value of the equipment comes from its use rather than its ownership. When upgrading is anticipated in the future, leasing provides more flexibility. Leased equipment is also a predictable expenditure since it becomes a line item on your monthly budget. Tax advisors can determine whether that could lead to tax advantages, such as claiming lease payments as business expenses. This method would help control cash flow, preserve capital, and reserve credit lines for other uses.
Market research predicts that interest rates will continue to rise, despite being near historic lows. Companies can lock in long-term rates before they continue to rise, and supply chain challenges may take longer for the equipment to be installed. The lessee should consider locking in rates and delaying monthly payments until the equipment is installed fully.
Fee per use: Consumption-based agreements charge for each use. Fewer lenders provide this service, but it might help companies match payments with revenue. The costs associated with consumption models (such as service, equipment, upgrades, and implementation) can be unpredictable, even though businesses can package the entire solution for consumption models. Standard monthly payments could exceed the cost of using the equipment more than planned.
Loans: Long-term, fixed rates may be best if inflation rises. It might be helpful for small- and medium-sized companies facing tightened expectations from customers. The company owns the equipment and builds equity as it makes payments. When interest rates rise, a company can use capital as a down payment on a loan or reserve it for future growth. Businesses might seek lenders that offer zero-down financing on equipment - including installation and delivery - to preserve liquidity.