All small and medium businesses require the utilization of some form of equipment to operate their company. However, many businesses struggle with paying the cost of new or updated equipment when the time comes.A common solution to covering these costs amongst business owners is the utilization of equipment financing. According to the Equipment Leasing and Finance Association (ELFA), more than 80 percent of all U.S. businesses utilize some variation of equipment financing. Equipment financing offers a quick and simple solution to helping business owners acquire the machinery, tools and materials needed for the company to continue to prosper. Below are some of the key benefits of equipment financing.
Protect your cash flow: Equipment financing allows you to acquire new or upgraded equipment without having to dip into your cash reserves; as equipment financing typically does not require large upfront payments, nor require you to pay the total cost upfront. Rather, it allows youto make reasonable periodic payments, thus helping to improve budgeting by spreading out the cost of the equipment over time and keeping existing capital,lines of credit and other cash reserves intact for other needs of the company. With fixed payments, this can also allow the business owners to more accurately manage and forecast cash flow and allow them to plan for the future.
Earning potential: Based on how the new equipment will be used throughout the company’s day to day operations, it could generate enough revenue to essentially pay for itself (and them some) over the course of the note.
Convenience: Equipment financing transactions can be completed faster than traditional financing options and oftentimes require no down payment, along with favorable rates and terms that fit the company’s needs. Qualifying for equipment financing is generally easier compared to other financing options due to the fact that the equipment itself is used as collateral (unlike term loans or other options where business assets, cash, or sometimes personal property may be used as collateral).
Potential tax advantages: In some cases, businessowners may be eligible to deduct the entire purchase price of the new piece of equipment using IRS Section 179. They may also receive tax relief through interest and depreciation deductions.
Penhurst Capital’s network of sources offers equipment financing on new or used equipment including trucks, trailers, machinery, and agricultural equipment, among others, while offering rates from 6 to 30 percent with term lengths varying between 1 and 5 years. Penhurst Capital’s network generally provides approvals within 24-48 hours with funding completed as quickly as the equipment can be delivered.
