6 Benefits of Equipment Financing

The goal of every business is to grow and thrive, which is not an easy task in today’s economic landscape. For example, in the construction industry, you can’t take on contracts without the right heavy equipment and machinery, which is where equipment financing comes in. 

Here at Blue Capital Equipment Finance, we help businesses get back to work with our financial services that include equipment financing and leasing. In this article, we will be providing a guide to equipment financing and explaining the benefits it has to offer for your business. 

What is equipment financing? 

When you finance equipment, it refers to obtaining a loan that is used to purchase equipment for your business. This includes items such as a restaurant oven, a vehicle, a copy machine, etc. Our team at Blue Capital specializes in commercial truck financing, and all types of light/heavy commercial equipment financing in Canada. 

When you get an equipment loan, you will be required to make periodic payments that include interest and principal over a fixed term. At the end of the term, you own the equipment. While with equipment leasing, the equipment is returned to the owner at the end of the term, or it can be purchased via paying a buyout at the end of the term.

Here are some common types of equipment financing that are available:

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Lease-to-own

‍This type of equipment financing loan allows you to lease the equipment for a certain amount of time with a predetermined buyout price at the end of the term. That way you can own the equipment at the end of your lease and is a great option for businesses who don’t currently have the money to invest in the equipment up-front. 

Sale-leaseback

‍If you need to free up some capital, you can sell your equipment to financial institutions, and you can lease it back from them. This option gives you some flexibility, especially at times when you need it the most. 

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Residual leases

‍If you need to frequently upgrade your equipment but you also need to conserve your cash flow, a residual lease is a great option for your business. A residual lease is a financing option designed to match the revenue stream that a specific piece of equipment is expected to generate. 

The benefits of equipment financing 

1. Obtain the equipment you need now, not later 

Instead of waiting for months, maybe even years, to purchase the equipment your business needs, you can have it now with equipment financing. This means you can use the equipment to increase your revenues and boost your profits, instead of using unreliable equipment. This also protects you against inflation, financing assets now at a cheaper price, instead of trying to buy them later at a more expensive price. 

2. Non-reporting Lease

Here at Blue Capital Equipment Finance, we help our clients with non-reporting leases that do not reflect on personal or business credit bureau. Non-reporting leases will not affect our future borrowing power of any kind, and your income to debt ratios will remain stable.

3. Tax advantages

Some equipment finance payments are tax-deductible. The interest paid on the financing payments can be written off as tax-deductible. There are even bigger tax benefits when it comes to equipment leases. Leasing equipment helps businesses with 100% tax write-off benefits.

4. Create a payback schedule that matches your revenue streams

When discussing your equipment loan terms with a member of the Blue Capital team, there are lots of options for customizations. This enables great flexibility and allows you to create a payment schedule that matches your revenue streams. 

5. Keep your equipment up to date

You can always take advantage of new technology if you choose to finance your equipment. You never have to worry about the upfront cost, and you can continue improving your workflow with better, high-quality equipment. Obtain the equipment you need without your working capital taking a big hit. 

6. Increase your competitive advantage 

Acquiring new and advanced equipment will allow you to compete with other companies, and will translate across to your customers that you value your equipment and invest in your business. If you don’t keep up to date with new equipment, customers are likely to choose a company that does, and this will be damaging for your business. 

7. Reduce your risk 

If you do have the capital to spend on equipment, it might be more strategic to save it, and instead go with an equipment financing option. Almost every business experiences cashflow shortages at some point, and equipment financing gives you an option to free up capital for other expenses. 

Where to get equipment loans 

There are many options on the market today to obtain equipment financing. Typically, traditional bank lenders are stricter and have more requirements when it comes to equipment financing, rather than a specialized lender. 

Blue Capital Equipment Finance is a nationwide finance brokerage, and we have years of experience helping businesses grow with equipment financing. We can help you easily get approved with zero down payment options and low-interest rates. We have multiple finance options and can help you find the right loan for your business so that you don’t have to let old, and unreliable equipment slow you down. You can bring a truck to us or use our wide network to find your business’s next commercial vehicle or equipment.