As a business grows, it will inevitably need to buy new equipment. Vehicles break down, computers become obsolete, and production equipment can fail. Even if nothing breaks, a growing business will need to hire new employees and each new hire means a need for new equipment. Whether a business is aggressively expanding or simply trying to keep operating, equipment is a constant expense that every owner must confront.
A common way to obtain new equipment is equipment leasing. Equipment leasing has become increasingly common; at this point, approximately 80% of American companies lease at least one piece of equipment. It’s easy to see why this approach is so popular. If a restaurant’s kitchen range fails, it needs to be replaced immediately; however, the business might not have thousands of dollars sitting around for such an emergency. Small business equipment financing allows a business to avoid the up-front cost in favor of a lower monthly amount.
However, leasing has its downsides. When you lease equipment, you continue to pay for it for as long as you use it. Eventually, you’ll end up spending more than you would have paid to buy it. If you decide to upgrade later, you might still owe additional fees; many leasing agreements require a business owner to pay depreciation costs at the end of a lease agreement. Lease agreements can also be inflexible, meaning that if you decide after a few months that you need to upgrade, you might not be able to get out of paying for the leased item for the duration of the agreement.
Because of these issues, it can make more sense to seek out funding from a company like Loanability and simply buy the equipment you need. Not only does this give you ownership of the equipment, but these funds can also be put towards whatever else you want–you aren’t limited to just the amount needed for a specific piece of equipment. I mentioned above that a common reason for needing new equipment was hiring new employees. Funding from Loanability can be used to hire the employees and buy the equipment needed for them to do their jobs, along with any other need you might have. Equipment leasing can be an attractive option, but if you’re looking for something a little more flexible without the long-term commitment of leasing, give us a call and we’ll go over what we can do for you.