If you own a business and are short on resources but still need equipment for your business, you can choose to get a commercial equipment financing. While looking for a suitable financing company, there are many factors to consider.
It can be really difficult to come to a final conclusion with several factors governing the decision. Here, are the all the questions you need to ask and find an answer to before going ahead and considering commercial equipment financing.
What is the utility of the equipment in your business?
The value of any equipment comes from its use and not from owning it. Determine the length of time you will be using it and how much it will be useful to your business. The usage and utility will help you determine whether leasing the equipment would be profitable financing option. For this, you can do a cost/benefit analysis and compare the leasing costs and profits from the expected revenue.
How familiar is the financing company with the equipment and your needs?
No matter what your needs are, it is always preferable to work with a financing organization that relates and understands your needs. Above that, it is really important for the financing company to understand the tax and cash flow requirements of your business. The understanding by the commercial equipment financing company of market fluctuations and other factors that impact your business can greatly affect the successful outcome and desirability of a lease contract.
What are the total costs and payments and what are the payment options?
You need to be clear about the number of installments and all the payment options available to you and consider the options and choose the best that would work for your business. If you run a seasonal business, then you may want to consider skip payments or a step payment loan. If the commercial equipment financing partner knows the requirements and the business details inside and out, it would be easier for you to discuss and decide the proper terms.
What about the tax benefits?
This is a question that can save you thousands as all the financing schemes are considered as operating expenses and not as debts which means that you qualify for tax benefits.
How much support the commercial equipment financing consultants provide?
You may be wondering the significance of this. But trust me, it is equally important as well. You should know that you are not just a number and a company that treats you that way is not the right one for your business. You will be working with a particular financing company for several years. So make sure that the company values you as a customer.
What are my options for ending the lease earlier than decided?
The market is a dynamic one. Every day there is new equipment being introduced in the market. Now, if you are going for commercial equipment financing for a particular equipment and then there is a better and efficient one in the market and you want to get that for your business instead of the old one, what happens? In a contract, both the lender and the borrower are under an obligation. So for termination of the contract, there are always certain conditions laid down. You need to be aware of all of those conditions and make a well-informed decision after weighing all the pros and cons.
What happens at the end of the contract? After the end of the contract, you have 3 options:
– Return the commercial equipment
– Purchase the commercial equipment at a nominal fixed price
– Renew the contract. Determining one option out of these 3 and specifying it in the original lease agreement is important. That may get you some benefits as well.
All these questions help you get a perfect deal and as a result, your business runs smoothly.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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