Benefits of Equipment Financing for Small Businesses

Disclaimer:
Information
in
the
Business
Financing
Blog
is
provided
for
general
information
only,
does
not
constitute
financial
advice,
and
does
not
necessarily
describe
Biz2Credit
commercial
financing
products.
In
fact,
information
in
the
Business
Financing
Blog
often
covers
financial
products
that
Biz2Credit
does
not
currently
offer.

As
a
small
business
owner,
when
equipment
breaks
down
or
needs
to
be
replaced,
it
can
be
hard
to
find
the
necessary
cash.
Often,
companies
resort
to
purchasing
used
and
outdated
equipment
that
is
costly
to
maintain
and
repair,
simply
because
they
can’t
afford
the
upfront
costs
of
new
equipment
and
are
hesitant
or
uninformed
about
available
financing.

If
you
find
yourself
in
a
similar
situation,
equipment
financing
might
be
the
right
solution.
By
financing
the
purchase
of
equipment,
you
can
access
needed
tools
and
technology
without
dipping
into
your
emergency
savings.

This
article
explores
the
numerous
benefits
of
equipment
financing,
from
preserving
cash
flow
to
accessing
the
latest
technology,
and
provides
practical
advice
on
leveraging
these
advantages.

3
Key
Takeaways

1. Equipment
   financing
   is
   a
   smart
   way
   to
   free
   up
   free
   cash
   flow
2. Equipment
   financing
   can
   help
   you
   maintain
   steady
   costs
   over
   time
3. Equipment
   financing
   can
   be
   a
   smart
   alternative
   to
   leasing
   or
   purchasing
   equipment
   outright

Preserving
Working
Capital

Equipment
financing
allows
businesses
to
acquire
tools
and
technology
without
using
up
cash
reserves.
This
is
achieved
by
spreading
the
cost
of
equipment
throughout
its
useful
life,
which
frees
up
working
capital
that
can
be
used
elsewhere
within
the
organization.

For
example,
the
money
you
would
have
paid
for
your
equipment
up
front
can
be
used
for
marketing,
payroll,
emergency
repairs,
or
to
take
advantage
of
new
growth
opportunities.

It’s
easy
to
see
the
strategic
value
of
financing
equipment
when
viewed
this
way—it
allows
you
to
maintain
a
competitive
edge
while
managing
your
company’s
financial
health.

Access
to
the
Latest
Technology

Staying
competitive
often
requires
access
to
the
latest
technology,
which
is
typically
much
more
expensive
than
purchasing
used
equipment.
By
financing
your
equipment,
you
can
acquire
advanced
tools
and
machinery
without
the
need
for
a
large
lump
sum
investment.

Equipment
financing
offers
fixed
monthly
payments,
which
simplifies
budgeting
and
financial
planning.
While
you
may
still
have
surprise
expenses
in
other
areas
of
your
business,
you’ll
know
exactly
how
much
will
be
spent
each
month
on
your
equipment,
allowing
you
to
allocate
your
resources
more
effectively
without
having
to
worry
about
sudden
financial
strains.

Tax
Advantages

Equipment
financing
can
also
come
with
another
benefit—tax
advantages.
Under
the
current
federal
tax
code,
businesses
can
often
deduct
the
full
cost
of
financed
equipment.

Section
179
allows
businesses
to
expense
the
cost
of
eligible
equipment
purchases
immediately
rather
than
depreciating
them
over
time.
Additionally,
interest
paid
on
equipment
loans
may
be
tax-deductible.
Together,
these
tax
benefits
can
significantly
reduce
the
overall
cost
of
new
equipment.

Avoiding
Obsolescence

In
rapidly
changing
sectors,
machinery
can
become
outdated
very
fast.
Equipment
financing
helps
companies
to
circumvent
this
problem
by
giving
them
an
opportunity
to
upgrade
or
buy
new
equipment
at
the
end
of
their
financing
term.
The
flexibility
enables
small
businesses
to
always
have
access
to
the
latest
and
most
efficient
equipment,
keeping
them
at
the
cutting
edge
of
their
industries.
New
equipment
can
also
help
save
money
over
the
long
run
by
reducing
repair
and
replacement
costs.

Fewer
repairs
and
upgraded
equipment
also
typically
means
less
downtime
and
greater
productivity
and
efficiency—all
factors
that
should
be
considered
when
evaluating
whether
or
not
to
finance
new
equipment
or
opt
for
repairing
or
purchasing
used
equipment.

Flexible
Payment
Options

Lenders
offer
a
number
of
different
payment
options
with
equipment
financing
that
can
be
adjusted
to
coincide
with
the

cash
flow
patterns
of
your
business.
For
example,
you
may
be
able
to
take
advantage
of
seasonal
payment
plans,
different
term
lengths
or
even
deferred
payment
options
that
align
with
your
financial
capabilities.
This
flexibility
makes
it
easier
for
companies
to
balance
equipment
purchases
with
their
overall
financial
strategy.
Plus,
it
may
allow
you
to
make
extra
payments
during
the
high
season
to
pay
down
the
debt
more
aggressively.

The
Impact
of
Equipment
Financing
on
Business
Credit

Equipment
financing
can
improve
your
business
credit.
When
you
make
on-time
payments
on
your
equipment
loans,
you
demonstrate
reliability
to
credit
agencies,
which
will
reflect
positively
on
your
credit
score.

A
strong
credit
profile
can
help
you
access
additional
financing
opportunities
in
the
future,
supporting
additional
business
growth
and
expansion.
A
good
credit
score
can
also
help
you
negotiate
better
terms
on
future
loans,
leading
to
lower

interest
rates
and
increased
flexibility.

Speed
and
Efficiency
in
Procurement

When
your
company
needs
new
equipment,
time
is
often
of
the
essence,
and
delays
can
disrupt
operations
and
impact
productivity.

Equipment
financing
allows
you
to
quickly
access
the
necessary
funds
to
make
purchases
without
waiting
months
to
save
up.
Many
lenders
offer
streamlined
application
processes
specifically
designed
for
equipment
financing,
so
that
once
you’re
approved,
the
funds
may
be
available
in
just
a
few
days.
This
quick
turnaround
allows
businesses
to
act
fast,
securing
the
equipment
they
need
to
maintain
or
enhance
their
operations
without
missing
a
beat.

Moreover,
the
efficiency
of
this
financing
option
reduces
the
administrative
burden
on
business
owners.
Instead
of
dealing
with
multiple
vendors
and
payment
plans,
the
financing
arrangement
typically
consolidates
these
into
a
single,
manageable
monthly
payment.
This
not
only
simplifies
budgeting
but
also
frees
up
valuable
time
for
business
owners
to
focus
on
growth
and
other
strategic
priorities.

Alternative
to
Outright
Purchase

When
making
the
choice
between
financing,
leasing,
or
purchasing
equipment
outright,
business
owners
should
consider
both
their
needs
and
their
present
financial
situation.
Equipment
financing
offers
the
benefits
of
ownership
without
the
large
upfront
cost.
Leasing,
on
the
other
hand,
might
offer
lower
monthly
payments
but
at
the
end
of
the
term,
you
don’t
own
anything.
Understanding
the
pros
and
cons
of
each
allows
you
to
make
the
best
decision
for
your
situation.

You
May
Also
Like:

Conclusion

Equipment
financing
offers
several
benefits
for
small
business,
ranging
from
preserving
cash
flow
to
providing
access
to
the
latest,
most
modern
technology
and
equipment.
Because
financing
allows
you
to
spread
the
cost
of
equipment
over
time,
you
can
maintain
liquidity
in
your
business,
manage
your
finances
more
efficiently,
and
overall
increase
your
competitiveness.
For
more
information
about
financing
available
from
Biz2Credit,
click
here.

FAQ
Questions

Frequent
searches
leading
to
this
page

business
credit
score,

financing
companies,

financing
for
small
businesses