Benefits of Equipment Financing for Your Small Business
When it comes time for you to need equipment for your business you should stop and think before you place down the cash or credit card to make the purchase. Ask yourself, can you afford to take out such a large expense? Will you see the return on investment quick enough for it to not harm your business in the future? If you didn’t say yes to these questions, you may want to think about financing the equipment through a trusted direct lender. Financing your equipment has many benefits. Here are a few good reasons that you can use as a guide to help you make the right decision.
Allows You to Keep your Cash Reserves
You’ve probably heard it before, having good cash flow is key to running a smooth and successful business. And when it comes to needing equipment it’s probably not the best idea to dig into your cash reserve to pay for it. That’s when equipment financing comes in handy. Instead of having to shell out a lump sum of money all at once for a piece of equipment or software, you could apply for equipment financing and get on a flexible payment plan. Save your cash for other things in your business or in case of emergencies.
Annual Tax Advantage
In 2016, the US government created the IRS Code Section 179 allowing businesses to deduct the full purchase price of an equipment financed up to $2.5 million for the current tax year. This code was created as an incentive to encourage business owners to purchase equipment and invest in themselves. In addition, as of 2018, all businesses can benefit from a Bonus Depreciation offered at 100% on eligible equipment. To learn more about how you can benefit from Section 179 and the Extended Bonus Depreciation visit the IRSwebsite.
Safeguards from Obsolescence
Technology enhancements have become the norm with everything these days. With our smart phoneswanting us to update every month or a better version of a gadget or equipment becoming available, it’s difficult to keep up sometimes. As a business owner who works with equipment and software daily, you’re forced to keep up with the advances so that the way you do business doesn’t become obsolete, which may start costing you. Leasing or financing an equipment or software, means you have more options to purchase a desirable piece of equipment and upgrade your existing ones. This way you’re able to stay current without having to dig into your reserves every time there is an update on your equipment.
Less Documentation and No Down Payment Requirements
When you finance equipment with a direct lender, whether you purchase or lease it, you’re more likely to receive the equipment faster, than when you go with traditional lenders. With direct lenders, there is less paperwork and faster turnaround and is the best route for you need the equipment quickly. Also, keep in mind that if you finance your equipment, you don’t have to deal with a down payment, which could save you from upfront costs.
Now that you understand the benefits of financing equipment versus purchasing it with your own cash reserve, you can make the right decision for your business. The financing company you lease or purchase your equipment from is an expert on the ins and outs of how it all works. Use them as a trusted and valued consultant. They will give you beneficial advice and set you up with benefits ranging from setting residuals rates through lifecycle asset management solutions. If you would like to learn more about your options for your needs, Select Funding is your trusted financial partner.