The construction, medical, and restaurant industries are just three examples of companies that will need to purchase large, costly equipment just to open the doors. Business owners must also replace large equipment when it breaks down or a more efficient model becomes available.
As any business owner knows, the need to replace inefficient equipment or upgrade to a new model does not always happen at the most convenient times. It can also be incredibly expensive. That is the bad news. The good news is that you do not have to commit to purchasing business equipment that might be outdated by the time you finish paying for it. You can choose to take advantage of a form of equipment financing known as equipment leasing instead.
Understanding the Process of Equipment Leasing
When you choose to finance business equipment rather than purchase it outright, you make payments to the owner of the equipment for the duration of the contract. At that point, you have the option to buy the piece of equipment or discontinue payments and return it. Should you choose the first option, any payments you made throughout the duration of the equipment financing contract go towards the purchase.
You can also opt to sign a new equipment financing lease for the right to use a different piece of equipment. Just keep in mind that the equipment acts as collateral for your lease. If you do not meet the terms of the contract, the owner of the equipment can take it back and you forfeit any opportunity to apply payments to a future purchase.
What is an Equipment Loan?
Like equipment leasing, the piece of equipment you finance with a loan acts as collateral to secure it. You will need to go through a typical business loan application process and make a down payment of up to 20 percent. Business owners often reserve this option for equipment with a long lifespan required for the ongoing success of their company.
Whitefish Funding offers these and other equipment financing options. Please contact us today to learn more.