Equipment Financing vs. Leasing: 7 Tips to Know When Deciding to Finance Equipment
If your business is like most, you rely heavily on dependable, specialized equipment to help your employees do their jobs to produce products and services for customers. Without the right equipment, your business will falter, and you could struggle to keep up with demands. But what happens if poor cash flow or other financial problems make it difficult to buy the necessary equipment? This is where equipment financing options come into play. If you’re wondering whether to finance or lease your equipment, pay attention to some vital considerations before you make your decision.
Demonstrate What You’ll Use the Money For
Before someone will lend you money for equipment, or before they’ll lease the equipment to you, the person or company will want to know what you intend to do with the funds. Outline how the money will help your business grow and become more viable. Describe how without the equipment financing, you won’t be able to continue producing your materials.
Visit Your Business Credit
As with any type of financing, your credit will play a significant role in whether you can qualify for help and how much you can get. Get your documentation and information in order. This will save time and hassle down the road.
Take a Look at Your Own Credit
Depending on your situation, your personal credit may be a factor in whether you get the help you need. Gather the essential materials to show the lender your scores and other documentation. If there are any red flags, get ready to account for them.
Consider Your Options
If you decide to apply for financing, you don’t have to settle for the first rate quote you get. Take some time to shop around and compare multiple options. There are alternatives to big banks and financial institutions.
You can make the entire process run more smoothly and simply if you take multiple purchases and put them together under a single lease. This may even help you secure a more attractive rate.
Stick With One Application
While exploring many options is a good idea, once you find the right lender, go with that place and don’t submit applications anywhere else. This will actually increase your chances of approval.
It’s important to know the pros and cons to leasing and financing. There are also different types of leases. The more you understand, the better chance you have to make the right choice with equipment financing.