People Also Ask:
How Do I Decide To Purchase or Lease Equipment?
The main factor to consider is how long you plan on using the equipment. If you plan to use the equipment for at least 36 months, purchasing will likely cost less than leasing. On the other hand, you wouldn’t want to buy a piece of equipment that you’re only going to use for a year or two. For this reason, leasing is often recommended for industries that depend on the latest, most up-to-date equipment.
It’s also important to understand that just like Equipment Financing, leasing is still considered debt. This could potentially impact your ability to access commercial mortgages, a Business Line of Credit, or trade credit from vendors.
Can I Get Financing On Used Equipment?
Some business lenders have buy-back programs in which they purchase the equipment from the borrower at the end of the loan term. And since equipment often serves as collateral, a business lender might become the new owner of a piece of equipment following the borrower’s default. In these cases, you may be able to finance used equipment.
What Type of Equipment Can I Finance?
At UCS, we finance everything from vehicles to cloud computing technology to manufacturing equipment to medical equipment. If we conclude that we cannot finance your desired equipment, we may recommend another business financing product that would still provide the necessary funds.
Why Do Companies Choose To Finance Equipment?
In most cases, businesses choose to finance equipment because it makes more financial sense than leasing. Using borrowed funds to purchase the equipment also allows the company to use its own money for other purposes, like marketing, hiring, etc.
Here are some reasons why companies choose to finance their equipment:
- You don’t have the cash. If you’re eager to buy a new piece of equipment or machinery but don’t have the money on hand to make the purchase, equipment financing could help you.
- You don’t want to use up your other forms of credit. Some businesses also use this type of business credit instead of making purchases on a business credit card or credit line. Buying machinery or equipment using a loan lets companies keep their credit cards and credit lines available for other day-to-day purchases or emergencies.
- You’re in a hurry to grow your business. Investing in a new piece of machinery can help companies to grow quicker. Working more efficiently, expanding product lines, and taking on newer and larger clients are just some of the reasons companies choose equipment financing.
- Your most important piece of machinery broke down. If you need to replace it fast, equipment financing could get you the money you need in a matter of days.
- Your equipment needs to get replaced frequently. If your business is already multiplying, you might find that your equipment and machinery get worn down faster than you expected. Use equipment financing to help pay for a new machine.
- Advances in technology make your current equipment obsolete. Some industries need to invest in the latest equipment fairly often to stay competitive because of rapid technological advances.
Is Equipment Financing Tax Deductible?
Yes, interest payments for Equipment Financing are usually tax-deductible. However, you should never assume that this is the case before making any commitments. Talk to a tax professional to make sure you will indeed receive tax breaks on this specific piece of equipment.
Do Some Manufacturers Offer Financing?
Many heavy equipment manufacturers offer financing for their products. However, these programs might feature interest rates. And since you’re not using the equipment as collateral, the manufacturer might assign a higher rate to offset the risk.
Also, financing programs only allow purchasing the equipment. You don’t get to borrow a little extra money to cover the attached costs. As any business leader knows, all major purchases naturally create additional expenses. With Equipment Financing, you can negotiate with the business lender about borrowing enough money to purchase not only the equipment but also cover extra costs.
Can I Get Equipment Financing with Bad Credit?
Yes, this product is available to borrowers with bad credit. Since the equipment is being used as collateral, your credit score will only have a minor impact on your interest and terms. Still, the lowest possible rates are typically given to borrowers with higher credit scores.