9 May Why Equipment Finance makes excellent business sense

In the construction world, productivity is hinged on the workers and the equipment. Whenever the business owner seeks to double or triple the company’s income, such a plan can only materialize by a commensurate improvement of both the workforce and the tools used by those workers. These improvements can be categorized into quality and quantity. Whichever of the categories one prioritizes, funding is a necessity. After all, to make money, you have to spend money.

Now, there are different financial options for the business owner to fund his construction company. These options include crowdfunding, angel investing, macro loans, and the likes. Nevertheless, an excellent option which construction or trucking companies ought to consider is the equipment financing, also called equipment loan. This type of business financing provides companies with the investment needed to purchase business-related equipment, such as trucks, excavators, conveyors, and others. Below are the reasons why this tool-focused financial option makes excellent business sense.

  • Improved Cash Flow

Equipment financing does not put any strain on cash flow. This is because it often does not require any down payment. The business owner, therefore, has the option to free up available working capital for other expenses in the company – killing two birds with one stone. If this option does not exist, cash flow may suffer a gigantic hit, depending on the size of what is being purchased. Cash flow is one of the success keys of businesses. Equipment financing helps to maintain and improve cash flow. Payments of the loan can be made over the course of the agreed-upon terms.

  • Limited Documentation

Financial institutions’ loans often come with distressing procedures. Banks request several things such as years of business history, fair credit scores and attending documents, etc. All these can be quite strenuous. However, with equipment loans, life is easy. Financiers are already more than willing to grant you the requested loan because the equipment whose loan is being acquired solely serves as its own collateral. Only a few documents are needed – your driver’s license, equipment quote, equipment invoice, and a few other information.

  • Tax Incentive

To support businesses, including construction and trucking companies, who contribute immensely to the economy, there is the provision of government’s tax exclusion that covers equipment financing. Section 179 of the IRS Tax Code states that businesses may deduct up to the full purchase price of qualified business equipment from their taxes within the same tax year. Equipment can range from heavy machinery like backhoes to computers and specific software programs, etc. Tax deduction means more money is available to the business owner.

  • Availability of New Technologies

Technology is ever on the rise. The construction industry is not left out of this technology shift. There is the emergence of mobile technology, Artificial Intelligence, Virtual Reality, electric trucks, among many others. One cannot sit on one’s old trucks and expect to be at par with the competing truck juggernauts. Equipment financing allows business owners to acquire secure, stress-free, new construction technologies. This increases their competitive edge.

Now, to dissuade business owners from opting for equipment financing, a red flag of the interest rate is often raised. However, it is essential to note that most equipment financing is done with fixed-rate interest, which makes repayment of equipment financing loans easy. Moreover, unlike leasing an automobile, the business has the option to keep the equipment at the end of the lease.  If you have any questions please contact us to understand more about this excellent option.