Equipment Financing

The main benefit of small business equipment financing is that you’ll have the resources you need to purchase, lease, or repair your equipment on your business. You don’t have to wait for months to repair faulty equipment or make the necessary upgrade. You can improve your bottom line and cater to more customers with the right equipment.

One difference between equipment loans and traditional loans is that the equipment itself is used as collateral to secure financing. It is one benefit that small business equipment financing provides proprietors, as the emphasis for the lender is more on the value of the equipment over time than the borrower’s credit history. This also means some lenders may not require a down payment from the business. Even if a down payment is necessary, the amount isn’t usually as significant as other options.

This feature makes the qualification easier for small businesses and allows SMEs to obtain the expensive equipment needed to get the job done.

Maintaining positive business cash flow is a constant concern for small business owners. Purchasing equipment upfront can only complicate your cash flow. Taking out an equipment loan or lease allows you to spread the cost of the equipment, so you’ll be able to allocate a fixed amount every month and budget your expenses.

Equipment financing and leasing are two popular options for businesses to acquire the necessary equipment. However, there are differences in how they affect taxes.

With an equipment loan, you make payments throughout the loan term and pay interest to the lender at the agreed-upon equipment financing rates. While the interest paid on the loan payments can be written off as tax-deductible, the total principal payment cannot be written off.
On the other hand, with most equipment leasing programs, you can write off the entire lease payment as a business expense. This means that the entire amount paid for the equipment can be written off by deducting the monthly lease payments. Additionally, there are government incentives written into the tax code that offer significant tax benefits for leasing. For instance, under Section 179 of the IRS Tax Code, the full amount of equipment purchases can be written off if an equipment lease is set up. Even if you do not pay the entire amount for the equipment financing rates in the year you are filing taxes, you can deduct the entire amount from your taxes for that year.
To take advantage of these tax benefits, we recommend forming a strong relationship with your tax professional and doing research when choosing the right lender for your financing needs. By working closely with lenders and tax professionals, you can ensure that you get the most out of the tax benefits that equipment finance companies can offer.

A business line of credit is an excellent option for businesses looking for flexibility in financing. Once approved, you’ll receive a credit limit from the lender, and you can withdraw from it anytime without exceeding the limit. You only have to repay the money you’ve withdrawn (plus interest) – not the entire credit limit.

Check out invoice financing if your business is experiencing cash flow issues due to unpaid invoices. This financing allows you to use pending invoices as collateral in exchange for immediate funding.
Lenders generally advance 80% to 90% of the total invoice value, and you’ll receive the remaining percentage (minus lender fees) once your customer pays their dues.

A business term loan is your traditional business loan where you receive a lump sum of money you need to repay in fixed installments over a specified period. Many business owners prefer term loans because they’re straightforward, and you can use the funds for almost any business purpose.