The COVID-19 pandemic put many businesses in a Catch-22: they may want to postpone equipment purchases to reduce expenditures and reserve cash, but at the same time, many need to upgrade to new equipment and technologies to stay efficient, productive, and competitive. Equipment financing may make it possible to get the best of both worlds and avoid large, upfront expenditures while providing your business with the equipment necessary to keep your operation running smoothly.
According to the Equipment Leasing and Financing Association, “78% of US businesses across all industries rely on financing equipment purchases through loans, leases and lines of credit.”
Equipment financing can cover a wide range of business equipment, including farming equipment, manufacturing machinery, restaurant ovens and ranges, construction equipment, medical equipment, and IT purchases such as software, servers and more.
Now, when liquidity and access to capital may be limited and/or time consuming, financing equipment may be a preferred path for flexible terms and quick execution. Here are five of the key benefits.
Stay ahead of the competition
The pandemic acted as a catalyst for innovation and advancements in technology, and many businesses had to accelerate their digital transformation efforts to stay in business. Organizations that don’t stay up to date with the latest innovations in their industries can lose their competitive edge and risk being left behind. With equipment financing, you can invest in your future without burning through the cash you need today.
Be more resilient
Old, outdated, slow, or malfunctioning equipment can drastically reduce your efficiencies, productivity, and ultimately, revenue. By financing the equipment you need quickly, your organization will be set up for success and better able to adapt to changing market conditions.
Reduce your upfront investment
The recent crisis took everyone by surprise. Even if you budgeted for equipment leases or purchases, an unexpected decline in revenue or growth may make those expenditures seem unattainable. With an equipment loan, you can avoid upfront lump sum payments and instead pay small monthly payments while benefitting from the latest machinery and materials.
Exercise leasing options
If you are concerned about making a long-term commitment during turbulent times, you may want to consider leasing your equipment as your mode of financing. You’ll still get the advantages of using new technology and can always opt to purchase the equipment at the end of your lease.
No collateral needed
Finally, equipment financing doesn’t require any collateral, unlike conventional business loans. In fact, the equipment you are obtaining acts as its own collateral, making it easier for businesses of all sizes to procure a loan.
Bottom line: If your business needs to keep expenditures low but still wants to stay on the cutting edge, equipment financing might be the answer.