Each year, we spend $192 billion on new construction equipment globally.
Technology moves so fast, and the market is so competitive that you need up to date equipment. As you can see, that is a lot of expenditure. Thankfully, equipment financing could be the solution.
Read on for the main benefits of equipment financing.
Avoid Costly Purchases
No matter how well your business is doing, you always want to preserve as much capital as you can. Investing in large expenditures comes with a large financial risk and even more so for smaller businesses.
Financing provides a handy solution to this problem. Regular, small payments mean that you will not need to dip into your capital when investing in high-cost assets, such as equipment.
You can often pay lease payments in line with equipment productivity. This option means you do not have to worry about the loss if the investment does not give a good return, save costs in the future, or increase efficiency.
Gain Tax Benefits
If you are a small business owner, financing equipment can provide some considerable tax benefits.
Using Section 179, companies can deduct the full value price of financed equipment. This process can accumulate up to an amount of $500,000! That is a serious tax saving!
To qualify, businesses must finance and put into operation the equipment before the end of the tax year. The deduction gives room for smaller businesses to take full advantage of financing options.
Improved Financial Planning
Consistent budgeting and maintaining cash flow are vital for a small business, and large capital outgoings often result in fluctuating budgets. Financing enables you to even out your expense planning by setting regular, known payments.
There are a few different ways of financing equipment, and they all offer financial incentives. Full lease or equipment loans allow you to take depreciation on the equipment. Operating leases or FMVs allow you to make lower payments without the depreciation.
A loan will allow you to set the payment amount for the life expectancy of the asset. A lease will allow for lower expenses for the expected duration of use.
Get Up-to-Date Equipment
In this competitive market, it is important that your business has the latest and best equipment.
Even if they wanted to, many businesses do not have the capital laying around to buy the equipment they need. Financing opens the door to obtaining this equipment and protects your business from stockpiling worthless and obsolete equipment.
This option also makes it much easier for your business to expand as you have easier access to the equipment new employees would need.
As you can see, equipment financing has some major benefits for your business.
Not only will financing help your plan your expenditure, but it will also reduce it and provide tax benefits. With better control of your spending and up to date equipment, your business will be on the road to success.
If you are considering equipment financing, you can request a quote here. At Formula Funding, we help small businesses grow in a few easy steps.
Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.