Commercial Equipment Loan Or Lease?
So you need to buy equipment for your company. It means you are going to apply for a loan. However, to receive business financing in the conditions of the present economic situation is not that easy. The requirements lenders put forth today are rigorous. Usually only successful and thriving companies get approval for the loan.
In case it is a small business it is next to impossible to obtain a loan. The majority of them (in fact ninety percent) get rejected in their desire to receive one. At the same time they cannot resort the conventional financing.
Still there is an option you can use. And this is a commercial equipment loan. It represents a kind of financing businesses can make use of in order to obtain the necessary equipment. You should mix up two notions, a loan and a lease. If it is a lease then the lender holds his title to the equipment. In other words, the equipment is being rented by you. Thus, when the payments are paid off you become the owner at a preset purchased option. In the majority of cases a lease is a $1.00 purchase option or fair market value option that should not go over 10% or the original price. So the equipment serves as additional collateral.
It should be said that a lease is more advantageous than a loan. It does not put you into that financial strain, as you have to pay less money. What is more, the payments are tax free.
If you want to develop your business and open some subsidiaries, if you need equipment in order to carry out a new project, if new equipment can help you to make your business more successful, then you should get a lease.
What is more important is that a lease can be obtained by any client even those with bankruptcies, tax liens, slow pays and repossessions. What is considered when you apply for a lease is your assets, not credit record.
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