Your new business is off the ground and you're ready to open your doors to the public. This means production will skyrocket, and you'll need more equipment to increase your capacity. As a new business owner with little cash flow at the moment, you may think equipment financing is out of reach. However, equipment leasing could be the solution you've been looking for.
Equipment Leasing
For your new business, you'll need pricey equipment to keep it running. Your new venture may not have developed the credit you need to purchase the equipment outright, and equipment leasing, a type of equipment financing, is the next best option. You'll basically rent the equipment from someone for a period of months or years and pay interest on it. At the end of the lease, you may be given the option to own the equipment.
Creative Leasing
Equipment financing is a $900 billion-plus industry. Even if you're low on capital, don't count yourself out of the equipment financing game without first exploring the creative financial products that are available to you. Chances are financiers have seen your exact situation once before and have come up with a financing solution for it.
For instance, if your business is seasonal and you expect there will be some seasons or months with higher cash flow than others, you might need a specialized product. For businesses such as farming that are seasonal in nature and rely on semiannual yields for revenue, payments are flexible. You can similarly find an equipment leasing option that allows your payment amounts to fluctuate.
When business is good, you'll pay more to offset those times when cash isn't flowing as freely as you'd like. Your required payment amounts will be lower during those times you expect cash flow to be tight.
Taxes
Depending on the type of equipment lease you receive, you may be entitled to tax benefits. For instance, if you have a capital lease, in which case terms indicate you're paying toward owning the asset at the end of the contract, the government considers the interest you're paying as an expense. As a result, you can use this as a tax deduction when it comes time to pay Uncle Sam.
In an operating lease, your principal payments are deemed an expense. This is reflected in lower income for your business, which places you in a lower tax bracket. This will leave you with a lower tax bill at year-end.
Conclusion
By choosing equipment financing such as leasing, you're giving your business a chance to grow. You won't tie up large sums of money for purchasing new equipment, and you'll have more cash flow to work with to pay your employees and market your new business. For more information, contact a company like Solution 7 Incorporated.
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