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Equipment Loans
You need equipment to run a business. In order to acquire the equipment
you must first decide if you want an equipment loan or a lease. A loan
requires a down payment of at least 10% of the total value of the
property. A lease will require small initial payment, which can be as
little as 1% of the value of the property.
Taking out equipment loans has several disadvantages. Loans require that
you use cash reserves, and reduce your available line of credit. Leasing
equipment enables you to spread smaller payments out over a period of
time and does not affect your line of credit.
The rate of your lease is based on the predictable depreciation of the
equipment. The rate is also based on your lease term, the kind of
equipment you lease and credit history.
The duration of the equipment loan is for the lifetime of the equipment,
meaning you essentially own the equipment. Lease offers you the option
to upgrade your equipment every few years if you so desire. This way you
avoid the expense of replacing outdated equipment. This benefit has made
leasing an increasing popular choice for small businesses, new business,
and large growing corporations.
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