For most business owners, acquiring new equipment is essential in order to improve and/or expand the company’s offered products or services. And with technology constantly changing, equipment will eventually have to be replaced and upgraded. So how can businesses obtain new equipment and not deplete their bank accounts at the same time? The answer lies in financing equipment.

 

There are many advantages attached to financing equipment and gaining business capital. At Main Street Business Capital, we work with lots of small businesses and oftentimes, financing is the ideal solution to help them get the equipment they need to grow without depleting their operating capital.

 

So how do you know if financing is right for you? When it comes to acquiring equipment, there are several different options – and sometimes it can feel overwhelming to determine which option is best for you. Here is a breakdown of the best ways to collect the equipment you need.

 

Financing vs. Cash Purchases

First, look at your working capital and make sure your monthly bills and operating expenses are covered. It can be hard for a small business to purchase expensive new equipment with cash while still paying their monthly bills. Unless you’ve carefully budgeted and saved for a major expense like this, you probably can’t afford to purchase the equipment outright. Financing gives you much more flexibility.

 

By financing equipment, you get to use the equipment right away, while being able to spread out payments over a longer period of time. This makes it easier to budget from month-to-month and won’t eat into your precious cash reserves. Even if you have the liquid assets available, it still may be better for you to finance. There are some things that businesses can only pay cash for and unforeseen expenses can arise at any time, so it’s smart to save your cash for those instances.

 

In addition, financing may also help you leverage your money so you can afford bigger or better equipment. With an all-cash purchase, you might not have enough saved to buy a new, higher-end model of the equipment you need. Choosing to finance the equipment purchase makes it much easier and more attainable.

 

Financing vs. Renting

When comparing equipment financing to renting, the advantages will depend on your needs. If you only need the equipment for a very short time frame, then it would make sense to rent. Otherwise, long-term rentals will carry unfavorable rates that cost you a lot more over time than buying the equipment. With financing, payments will likely be less than rental rates. More importantly, you will actually own the equipment. That means you can resell it or trade it in when you are done. With rentals and leases, there is no equity. You just have to give the equipment back when the term ends and you get nothing in return. You also get better business tax benefits by owning as opposed to renting.

 

Let’s look at an example. One of Main Street Business Capital’s clients was renting a piece of equipment. They would rent it over and over when specific projects came up that required it. All in all, they were paying upwards of $50,000 on rental payments per year. After seeking help from Main Street Business Capital, they realized they had options to finance the same equipment, and in the end, they had lower payments and reaped the benefits of owning their own equipment.

 

The Bank vs. Main Street Business Capital

Securing financing directly from a bank can be very difficult for small businesses. You’ll want to consider working with a financing company such as Main Street Business Capital. Banks can make it too complicated to secure working capital loans. Our goal at Main Street Business Capital is to simplify the process and explore every option for clients in order to get their equipment financed on the best possible terms for their capital situation.

 

Financing through an ARA member service like Main Street Business Capital is similar to applying for any loan. You work with a representative who is focused on your needs. You supply the pertinent financial information through an application and then let them know what equipment you are looking for, when you need it and what your monthly budget is. Then, they go to work for you.

 

Exploring Your Options

Every business is different – that’s why it’s important to look at all of your financial options. Main Street Business Capital has helped other small business owners finance equipment that enabled them to expand their businesses. With increased profits, the equipment essentially paid for itself while still retaining its resell value if they ever needed to upgrade again.

 

For more information on Main Street Business Capital’s services, call (844) 672-2386.