If you are in an equipment-reliant industry, you need the latest technology to stay ahead of the competition. However, purchasing equipment upfront can put a strain on your cash flow. Equipment finance helps you buy, replace, or update your equipment without affecting your business’s cash flow. Here is a summary of the benefits an equipment loan would give your business.
Equipment finance offers companies various tax benefits. For example, the lease instalments paid are tax-deductible, which helps reduce your overall taxable income. The amount paid can be written off by deducting the monthly lease instalment from your yearly tax report. You can plough these savings back into the business to increase productivity.
Easy to budget
Business loans allow you to make pre-determined payments over a long period of time. This way, you can budget for the instalments and easily manage cash flow while still focusing on your business.
Increases working capital
Using your business working capital to make an upfront purchase may negatively affect your cash flow. By spending all the working capital, your cash reserves may run low, making it harder for you to meet operating costs. Equipment loans give you access to cash so you can redirect your money in other areas such as expansion, marketing, talent recruitment, etc.
Mitigate risk against inflation and obsolescence
Equipment finance helps safeguard long-term investment against the potential increases in prices. Upon signing the lease, you lock in the loan rate, therefore protecting your business against inflation since the finance company absorbs the devaluation of your payment. In addition, if the equipment becomes obsolete, the lease protects your business from technological obsolescence.
Increase in productivity
Acquiring the latest equipment gives you a competitive advantage when fulfilling market demand or bidding for jobs. Using the latest technology can help increase productivity and overall profits for your business. Equipment financing is a great source of capital for business owners looking to upgrade or buy new equipment for their businesses.