Equipment Finance can be used to lease anything from company cars, trucks, computers or heavy manufacturing machines. This method of financing is very useful to businesses that don’t have enough financial muscle, or those experiencing a shortage of cash flow to those just simply being prudent with money in the bank.
Equipment Leasing can be done through; hire purchase or lease financing. In the event a business decides to go the route of using equipment finance companies the financier also known as the lessor buys the required equipment for the said business or the lessee. Therefore the lease financing company is the legal owner of the equipment. The financier then leases the equipment under a Lease Agreement to the business, which sets out the terms and conditions.
A variety of industries especially restaurants and manufacturing companies have used this method of financing to great effect. By getting an equipment finance company, in this case your local loan or finance company to buy all the heavy equipment required.
The benefit of this is that the restaurants did not have to make a large cash outlay to purchase this equipment and when these machines are in need of maintenance the equipment finance company (the lessor) was responsible for the up keep of the machines
The key features and benefit of using this business financing option
- Equipment can be obtained without any capital outlay.
- Payments can be made on a monthly, quarterly or annual basis depending on the agreement.
- The lease rental can be tax deductible.
- When the lease expires the business has to option of; refinancing the residual value or return the equipment.
