Guide to Equipment Leasing: The Basics

Guide to Equipment Leasing: The Basics

Starting up a business, or even maintaining or expanding an established business, can be very expensive, especially when it comes to getting the right equipment. Whether you are starting up an excavation business, running a farm or nursery, or whether you need office equipment or items to run a store, equipment is necessary. Unfortunately, it also costs a great deal of money to purchase these pieces of equipment — money you may not have up front or as part of your start-up business loan. In this situation, though, there is an option. You might consider equipment leasing.

Having the Right Equipment

Starting up a business, or even maintaining or expanding an established business, can be very expensive, especially when it comes to getting the right equipment. Whether you are starting up an excavation business, running a farm or nursery, or whether you need office equipment or items to run a store, equipment is necessary. Unfortunately, it also costs a great deal of money to purchase these pieces of equipment — money you may not have up front or as part of your start-up business loan. In this situation, though, there is an option. You might consider equipment leasing.

It is relatively easy to get an equipment lease. For leases of less than $100,000, the application process is about as difficult as filling out a credit card application (fairly simple and straightforward). As long as you are willing to meet the monthly payment obligations, you can usually get a lease based on your personal credit, rather than your business plan or business credit. Even though bank financing costs less, it can be a little more difficult to get this financing. If you can get such financing to pay for your equipment, there is no need for a lease. If, however, you bank financing options are limited, an equipment lease can help you get out of a bind.

Equipment leases are plentiful in supply. It is relatively easy to find a leasing company for most implements you need for your business. Because there are plenty of leasing companies, and because the market is flush, there are also good deals to be had. Many companies are offering lower monthly rates in order to compete for the patronage of small business owners. Additionally, some companies offer leases that are more akin to "rent to own", where they will credit a certain percentage of your lease payments toward your ability to purchase at the end of the lease term.

Starting Your Business Off Right

If you are starting a business, equipment leasing can be especially appropriate. Evaluate your needs carefully, and look at your budget. If bank financing will not cover all of your needs, you can shift your plan to lease equipment and use the bank funds to pay other expenses. Then, when your business is off to a good start you can buy your equipment outright — either new or from the leasing company.