If you have a startup business (a business under 2 years), you might have difficulty applying for a bank loan especially if you have no business credit history and due to the risk associated with startup businesses. Many traditional lenders and banks won’t be able to provide you with the financing you need to get started. If you need to obtain equipment, vehicles, tools, or machinery consider equipment lease financing. Leasing equipment provides businesses with many benefits which can be found below.
At the beginning, you will not have to pay the full costs like you would if bought the equipment you need. When you lease the equipment, you don’t have to find someone who will extend your credit to make purchases.
If you purchase your equipment, you won’t have enough money to update it for a while. Leases are flexible and you can lease higher quality equipment once your lease expires. There are constant upgrades in technology, and you might want or need a higher tech option for your business.
Instead of attempting to take out a loan to purchase the equipment and waiting months for a loan to get approved, you can lease to avoid unnecessary delays in your business operations.
You can claim the costs as capital allowances if your lease lasts five years.
Bank lines of credit usually have variable rates, but lease payments are fixed no matter what happens in the market. When you choose to lease, you won’t be affected by high interest rates.
When you lease equipment, business owners can write off 100% of their monthly payments off their taxable income each year.
There are a couple of variables that determine the overall cost of leasing equipment for your startup business.
Every lease is different but on average, companies are willing to offer 2-5-year leases with interest rates in between the ranges of 8.5-20%.
Below are some examples of the types of equipment you can secure for your startup business:
Both capital leases and operating leases have their own unique advantages. It all depends which one is best for your business.
Equipment leasing applications are simple and quick to fill out. Approval usually takes less than 24 hours so you can get your equipment as quickly as possible. However, there a few key things you should consider first if you want to get approved right away and get the financing you need for your startup business.