In the world of equipment financing, there are a lot of myths that get thrown around from person to person making it difficult to separate fact from fiction. Let’s disprove these equipment financing myths and misconceptions and get them out of the way so you can find the funding you need for your business. Time to start debunking...
MYTH: Financing is too expensive.
It certainly doesn’t have to be pricey. Many large companies need financing, and they definitely won't be OK with overpaying! Banks, insurance companies, and investment houses—they all use financing. But it doesn’t have to only be the large companies that benefit from equipment financing. Small companies can get huge advantages through financing their equipment, too. If you look at the potential tax savings and are committed to making monthly payments on time, financing can turn out to be a fiscally responsible choice.
MYTH: You can’t finance used equipment.
Is it harder to find financing for used equipment? Sure, but with the right lender you won’t have any problems. There are financing programs that have no set age restriction. So guess what? That ten-year-old piece of equipment that you’ve been having trouble getting financed can actually be leased. Whatever the equipment may be, as long as it’s in good condition and can be sold at a fair price, it can and will be financed.
MYTH: Financing only works for office equipment and automobiles.
That word “only” really strikes a bad chord in the industry. It makes financing seem so restricted. So let’s take that out and say: “Financing works for office equipment and automobiles.” Look at that, much better! Financing does work for those industries, but that’s not all. Almost anything and everything has been or can be financed. The key is finding the opportunity to do so and to pounce when it comes knocking. There are tons of specialty financing companies out there, you just need to do the research to find the one that works with your industry.
MYTH: When you finance equipment, it’s difficult to upgrade.
This can be a huge issue. Times are constantly changing, and in this age of booming technology, upgrading is the only way to not get left behind. Financing programs can easily accommodate and encourage upgrading, but here’s where it gets good, it’s possible to upgrade without increasing your monthly payment.If upgrading is important to you and necessary for your business, bring that up to potential lenders. They'll be able to help you find a plan that works.
MYTH: There’s no early payoff for financing.
That’s a good one! Financing gives you and your business more options. If you’re thinking you want to pay off your lease early, than do so! Certain lenders have no penalties. However, there is no economical benefit to paying it off early. Many businesses prefer to pay off their lease throughout their scheduled term.
MYTH: Financing paper work is complicated and messy.
Paperwork isn’t my thing and I’m sure you’d agree. The whole process is just plain unattractive and annoying. Sign here…initial here…yada yada yada. Find a potential lender who's application takes less time than renting a car, five minutes tops. Of course, the more information you provide up front, the better your chances for approval. Remember, the reward is worth the work.
MYTH: You should always pay cash for equipment.
Why? Wouldn’t you rather hold onto that cash? I know I would, plus if you finance you get to keep the money, enjoy increase in revenue, and the improved productivity due to your new equipment! Not to mention that in a fast-moving business environment it’s always good to have extra cash on hand in case of emergencies. Having cash on hand keeps businesses running even when things get tough.
On a positive note
So with all these myths being busted, what more could you ask for? How about some benefits? Benefits are always nice to hear.
The number one reason small businesses fail is due to the lack of liquidity. They have no money to make money! Keeping an ample amount of cash in your companies’ checking account should be a top priority for companies of any size. Financing equipment keeps you from eating up your cash funds, while still getting what your business needs to profit.
Do you hate the application process? You don’t have the time to sign a stack of papers, and even if you have extra time, you don;t want to spend it with a pen in hand. Some equipment financing providers only make you sign one document to apply. Yep, one piece of paper. That’s all! All you have to do is give them that ONE signature with your equipment quote and boom! Oh how beautifully simple and easy.
Wait, what? 100% financing? Yes, it's true some leasing companies offer 100% financing, which is a great way to avoid a major cash outlay, just saying.
Costs are always on the rise, so why not lock in a low monthly payment? Plus, do you really want your monthly payment to change without your consent? Having a fixed payment means you know what's happening and changes can't happen without your approval.
Believe is or not, there are some awesome tax advantages for leasing that can't be had any other way. They go by the name of Section 179 Tax Deductions and they can save you some serious money.
So, what are you waiting for? Go finance some new equipment! You can thank us later.