Financing for Manufacturing Equipment is a Money Saver

There are several factors to manufacturing equipment financing that business owners consider. But one of the most important factors is whether to pay through cash, financing, or leasing. For those that decide to finance the equipment, owners will notice a significant difference between that and leasing.

Of course, all of those options have benefits and downsides, but it helps to know exactly how businesses can save money and reap large benefits through financing.

What Is Equipment Financing

This is the term used to process taking out a loan to purchase a piece of equipment with the intention of being the owner after the terms of the loan are met. Manufacturing equipment financing is the smartest way to own valuable equipment afterwards since the payments are spread out over time.

It’s also smart in the sense that a business owner can shore up cash for other purchases or maintain a positive cash flow. This is further encouraged because, with equipment financing, the equipment itself is often the collateral as opposed to large sums of cash.

Financing Vs. Leasing

To understand the extent of the savings made, it’s worth considering the differences between financing and leasing equipment. Whenever a business finances equipment, the equipment is kept after the loan is paid off.

In cases of leasing, the payment is treated as a rental and so after the term is over, the owner is given some options:

• Returning the equipment to the leasing company.
• Purchasing the equipment at a predetermined value.
• Purchasing the equipment at its current fair market value.
• Purchasing the equipment for a one-time payment.

There is value to financing because that additional payment isn’t there, and the terms of the loan are structured in that the loan only covers a portion of the useful life of the equipment. Instead of having to lease the same equipment several times or pay a large lump sum upfront, financing removes the need to do that.

Furthermore, whether a company is leasing or financing, those payments are tax deductible.

How Does It Work?

The process is straightforward. File an application and provide an equipment quote or proposal with supporting documents. Approval takes a few days but can take longer depending on where you are applying.

Reasons To Consider Financing Manufacturing Equipment

Financing equipment outright is a sound long-term financial strategy for many reasons. To start, leasing equipment in this manner tends to be more costly, even if repairs and maintenance costs are covered by the leasing company.

Financing requires less documentation to apply and offers plenty of tax incentives to keep costs down. Afterwards, business owners can enjoy full ownership once the loan is paid off, which can be leveraged further.

Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.