Advantages of lease financing to acquire equipment for your business
Lease financing provides many advantages to businesses, large and small. Regardless of your field of expertise, lease financing can be a great way to acquire the equipment you need to run your business successfully. Read on to discover the five advantages of lease financing.
Definition and advantages of lease financing
Before we dive into the advantages of lease financing, let us explore what lease financing means. Lease financing provides business owners with the possibility to lease the equipment they need for a prolonged period of time. Typically, the business will pay a fixed monthly fee to rent this equipment. Business can lease a variety of equipment including office furniture, manufacturing equipment, computers and software and more. Basically, lease financing provides an alternative to paying cash, securing other forms of financing, or taking out a loan.
Lease financing is a simple financing solution for start-ups, self-employed workers, small companies and large businesses.
Advantage #1 of lease financing: simple and quick
If you run a business or plan on starting one, applying for lease financing is easy. Consult a broker such as Affiliated Financial Services to help you get the financing you need. Typically, they will ask you to fill out a short financing application. Furthermore, with a brokerage firm the approval process is quick and simple.
Advantage # 2 of lease financing: conserve your working capital
If you obtain financing to purchase equipment, you are not divesting a huge lump sum at once. As such, you can preserve your capital. You can then invest it in money-making opportunities, providing you with a higher rate of return.
Advantage #3 of lease financing: no sales tax on equipment
If you live in Canada, provincial and federal sales taxes on the purchase of equipment apply. However, if you lease equipment, there is no sales tax payable on the acquisition of equipment. This can represent huge savings.
Advantage # 4 of lease financing: tax break
On top of saving sales tax on the acquisition of equipment, your monthly payments are tax deductible. As you require your equipment to run your business, payments are considered to be an operating expense. Thus, they can be deducted when you file your income tax return.
Advantage #5 of lease financing: ability to borrow from banks is maintained
Your borrowing capacity is preserved. This means you can still borrow from banks. Furthermore, leasing is typically one of the cheapest forms of financing. Leasing is also inflation-friendly, as the terms of payment are fixed even if the cost of the asset goes up. Additionally, leasing does not require a down payment and is independent from other financing sources.
As you can see, lease financing is an interesting solution for all businesses. It is quick, simple and offers several advantages including tax breaks. Furthermore, many leasing options include the option to buy the equipment when the lease is up. Leasing also provides the opportunity to upgrade your equipment without having to reinvest a huge sum. Speak with an Affiliated Financial Services broker today to find out the leasing options that best suit your needs.
