If you have just started your own business, you will most likely need equipment to run your venture properly. Whether you need office and computer equipment or heavy machinery, you may be a bit strapped in cash to purchase everything you need when you are first starting out. Many new business owners will either finance or lease this equipment when cash flow has not yet been established. Here are some guidelines to follow in determining which option is right for your situation so you get the job done at a rate you can afford.
Know The Usage
When deciding to lease or take out a loan for a large expense, the use of the equipment makes a difference in the route you should take. If you are going to be needing to make upgrades to the equipment in time due to technological advances, you will most likely want to lease over taking out a loan so you will always have the latest and greatest equipment out there to do your job. If the equipment is one that does not use technology to operate, such as office furniture or a large piece of machinery without a computer to run it, then equipment financing is favorable, as you will be able to keep the item after it is paid for.
Determine The Time-Frame
To lease, you will need little or no money upfront to obtain the equipment you need to do the job. This is desirable when you have to jump right into the job to start making a profit. If you are still becoming established and you are looking for a piece of equipment to better service your customers, you have more time to save up money for a down payment. There may still be financing options available for those that need equipment quickly, but who wish to keep the item for long-term usage.
Consider Delaying Payments
When applying for a loan, see if there is an option for a delayed down payment so you have a chance to get the equipment now. This would work well if you have established jobs set up where you know you will be able to get the needed funds quickly. Another alternative is to ask your customer for a down payment for the work you will be doing. You can then apply this toward your own down payment to finance the equipment you need to do the job.