Equipment purchases can be a major expense for small to mid-sized businesses. Deciding if financing is right for your business is a big step for many business owners. This guide will provide you with valuable insight to help evaluate your specific needs and determine if financing is right for you.
What is Equipment Financing?
Office equipment financing offers predictable monthly payments with low or no upfront costs while preserving cash in the bank. Things like multifunction copier equipment, phone systems, and computer hardware and software can all be financed. There are a variety of options available so working with a technology provider who specializes in equipment financing can be helpful.
Benefits of Financing
According to the Equipment Leasing and Finance Association (ELFA), more than 78% of U.S. businesses across all industries rely on financing equipment purchases through loans, leases and lines of credit. Given the current economic climate and rapid pace of advancing technology, there are several reasons to consider business equipment financing:
- Preserves working capital
- Makes equipment upgrades easy (lifecycle management)
- Provides 100% financing with no down payment
- Soft costs like delivery charges can be included
- Helps you get equipment faster
- Offers potential tax deductions
- Flexible payment structures available
If you have a lower business credit score, a lender may require a personal guarantee, which holds you personally liable for payments if your business is unable to make them. You should also consider the length of term, so you don’t find yourself making payments beyond the usable life of the equipment. Common terms for equipment financing range from 24-63 months. With any loan or lease, you are taking on business debt and should be prepared to make payments even if your business has a downturn.
Bundled leasing offers more than just traditional financing options by allowing you to combine your equipment lease and services into one monthly payment. This provides convenient invoicing and simplified expense tracking. When it’s time to upgrade to new technology, you can easily trade-up the equipment that needs replacement and keep everything billing under one contract.
While leasing is commonly used for financing business equipment, there are other options to consider.
Small Business Loan – SBA loans are long-term, small business loans partially guaranteed by the government. Unlike conventional term loans, a small business loan offers business owners the opportunity to take advantage of terms specific to the SBA program, while removing some of the barriers to traditional financing options.
Line of Credit – Even if you don’t have immediate equipment or cash flow needs, you may want to consider a line of credit. As needs arise, you can draw on a line of credit and pay interest only on the amount you borrow. Pursuing a line of credit can be a prudent strategy to ensure a loan is available when you may need it most.
Cash Purchasing – With a cash purchase there is no loan or lease to enter into, so the equipment is owned outright. One immediate benefit of using cash to purchase business equipment is simplicity. However, it may be important to your business to maintain cash on hand to take advantage of other business growth opportunities.
Definitive Technology Solutions (DTS) is a leading technology and services provider specializing in IT services, copiers and printers, managed print, phone systems and document management solutions. We deliver reliable, proactive and comprehensive solutions that solve technology challenges, optimize productivity, increase security, streamline operations and enable growing business to focus on what matters most – running their operations. Offering advanced technology know-how, the DTS team brings innovative solutions that help businesses simplify and leverage technology to meet specific objectives. Since opening in 2004, DTS has grown to support thousands of customers with a wide variety of technology solutions.
From a lease to a fully bundled solution, we are your specialist for office equipment financing.
- Easy pre-approval
- Funding amounts up to $500,000
- Flexible payment options
- Finance multiple pieces of equipment on one contract
- No down payment required with terms from 12-60+ months
- Soft costs can be included up to 25%
Contact us today to learn more about financing essential equipment for your business!