Leasing equipment provides companies with affordable access to expensive capital equipment, financial flexibility, and convenience. Careful planning and execution of equipment lease agreements will help companies get the most from these equipment acquisition arrangements.
Right now is a critical time for capital investment, as the Equipment Leasing and Finance Association predicts that businesses, governments, and other organizations will spend about $1.5 trillion on new equipment in 2015. A growing number of companies are turning to equipment lease agreements to acquire needed capital equipment, as tight credit conditions continue to make acquiring credit from traditional lenders like banks difficult.
When preparing to finance an equipment acquisition through an equipment lease agreement, the following steps are recommended:
1. Identify specific needs. It’s not enough to just determine what equipment your company needs. You also need to determine the specific needs it will be employed for and how long these needs will last. Many companies get saddled with paying for equipment long after the need for that equipment has been filled.
2. Decide whether a lease or a loan is your best financial option. Examine your company’s cash flow, tax situation, and credit to make the right decision.
3. Once you’ve identified specific equipment you need, talk to manufacturers about reliable leasing companies. Manufacturers often know the best leasing companies that businesses can acquire their gear from.
4. Get a quote from the leasing company that you’re considering and compare it to quotes from other leasing companies. The cheapest quote isn’t always the best choice, but the price you pay shouldn’t be significantly higher than quotes provided by other equipment leasing companies.
5. Negotiate the details of the agreement. Equipment leases can often be quite flexible.
6. Consult with your accountant. Crunch the numbers and use any available tax deductions from the lease agreement to your company’s advantage.
Lease agreements provide an excellent opportunity for companies to get the equipment they need to keep their businesses competitive. They also provide a number of credit and tax advantages to lessees. Nearly 85 percent of all U.S. companies lease some of their equipment from an equipment financing company, according to the U.S. Small Business Administration. Of those companies, about 79 percent say that leasing is a good or excellent means of financing equipment purchases.
Nation’s Equipment Finance provides a variety of equipment financing options for companies seeking an affordable way to gain access to quality equipment. Nation’s Equipment Finance typically provides loan and leasing agreements ranging from $1 million to $50 million, with three to seven repayment terms. To find out how Nation’s Equipment Finance can help meet your equipment needs, contact the company today.