Equipment financing can be a great way for businesses to grow, expand, or jumpstart their operations. By providing the capital needed to purchase equipment, businesses can avoid taking on debt or using funds that could be better used elsewhere.
Companies of any size turn to equipment financing providers and brokers to get the equipment they need to keep their businesses running. Small business owners, in particular, find that equipment financing can be a lifeline when they need to purchase expensive equipment but don’t have the cash on hand to do so.
Benefits of Equipment Financing For Businesses
The benefits of equipment financing are numerous, but here are 10 of the most impactful:
1. Get the equipment you need without using up your working capital.
When you finance your equipment, you can free up your working capital to be used for other purposes, such as inventory or expansion.
2. Preserve your credit line for other purposes.
If you use your credit line to finance equipment, you may not have as much available to you for other needs. It’s best to keep your credit line available for other purposes and finance your equipment separately.
3. Get tax benefits.
In some cases, you may be able to deduct the entire amount of the loan as a business expense. This works best if the equipment is used for business purposes only because personal use will limit the deduction.
4. Enjoy fixed monthly payments.
With equipment financing, you’ll know exactly how much your payments will be each month. Fixed monthly payments can make budgeting easier and help you predict cash flow.
5. Improve your company’s balance sheet by keeping debt off of it.
By financing your equipment, you can avoid putting debt on your company’s balance sheet. This can be helpful if you’re trying to obtain additional financing or sell your business. It will also look good on your credit report and financial position.
6. Get flexible terms that match the useful life of the equipment being financed.
Equipment loans and leases usually have terms that correspond to the useful life of the equipment being financed. There may also be early payoff options that can save you money.
7. Be able to finance 100% of the cost of the equipment, including taxes and shipping charges.
With equipment financing, you can finance the entire cost of the equipment, including taxes and shipping charges. This can be helpful if you don’t have a lot of cash on hand.
8. Avoid having to make a large down payment which can tie up your working capital unnecessarily.
One of the biggest benefits of equipment financing is not having to put up a large down payment. The down payment is often 10% to 20% of the cost of the equipment. Equipment can be expensive, so this can free up your working capital significantly.
9. Qualify for financing even if you have bad credit.
If you have bad credit, you may still be able to qualify for equipment financing. There are many lenders who work with businesses that have less-than-perfect credit. Most of these lenders will look at your business’s overall financial picture, not just your personal credit score.
10. Get the equipment you need quickly.
Once you’re approved for equipment financing, the process is usually quick and easy. In most cases, you can have the equipment in your hands within a few days to weeks.
About Section 179 Tax Benefits for Equipment Purchases
One of the benefits of equipment financing is that you may be able to deduct the cost of the equipment as a business expense on your taxes. This is made possible by Section 179 of the tax code, which allows businesses to deduct the full purchase price of equipment that has been put into service during the tax year.
To qualify for the deduction, the equipment must be used for business purposes only. This means that if you use the equipment for both business and personal purposes, you will not be able to deduct the full amount.
The deduction is also limited to the amount of your taxable income for the year. This means that if you don’t have a lot of other business expenses, you may not be able to take advantage of the full deduction.
Contact Charter Capital today if you’re considering equipment financing for your business. We’ll work with you to find the best possible solution for your needs and help you get the equipment you need to keep your business running smoothly. Our experienced financial brokers have access to a wide range of lenders and can help you get the best possible terms for your loan.
Give us a call today to learn more about our equipment financing services.