Funding for Small Businesses: Where Does Equipment Leasing Fit In?
According to the U.S. Census Bureau, nearly 20,000,000 firms have less than 500 employees. Meaning small business is big business. So how do you get your business up and running? The U.S. Small Business Administration has a 10 Step Plan of Starting a Small Business, which includes: writing a business plan, getting training, choosing a location, getting funding for your small business, determining the legal structure, registering a business name, getting a tax ID number, registering for state and local taxes, obtaining business licenses and permits, and understanding your responsibilities as an employer. Funding for small businesses has many options.
Funding for Small Businesses: Options
Item number three on the list, getting funding, can be one of the most challenging elements. Fortunately, it doesn’t have to be. First and foremost, you have to consider what you need and weigh the options of funding small business items specific to their purpose.
Typical funding options include business bank loans, credit cards, and leasing. Credit cards offer an immediate source of funding, however, it’s important to reserve your credit for immediate cash needs. Loans are another option for funding small business needs, but loans can be difficult to get in today’s economy and may require a lengthy process of establishing your business’ worth, or offering personal guarantees. Many businesses today also choose to use loans for mortgages or purchasing business establishments.
If you need a way to purchase business equipment – computers, copiers, telephone systems, and machinery – leasing can get be a quick way to get your equipment, reserve your cash flow, and provide tax benefits.
How do you use leasing to fund your small business?
Research done by the Equipment Leasing and Financing Association (ELFA) shows that eight out of ten U.S. companies lease some or all of their equipment. Nine out of ten businesses that lease equipment say that they will do it again. Of all the ways to acquire equipment, leasing is the method most frequently used for all equipment types. Reasons businesses are attracted to leasing as a funding option include:
•Quick, Easy and Less Expensive – the whole equipment leasing process is faster, simpler, and often less costly than other equipment financing alternatives.
•Conserves Working Capital Financing – equipment leasing finances 100% of the equipment cost, leaving precious working capital for other needs.
•Improves Cash Flow – equipment leasing allows you to pay for the equipment as income is earned from its use.
•Can often offer more competitive rates – the volume purchasing power of leasing companies can secure attractive financing deals and pass along the savings to the lessee.
•Tax Deductible – in many cases, equipment lease payments can be treated as a fully tax deductible expense (consult your accountant for specific tax advice.)
At Advantage Leasing, we specialize in funding equipment valued between $5,000 and $200,000. Since our capital is in-house, we can offer small businesses flexibility in how to set up their funding, and offer exceptional personal service.
How to start funding your small business
Fortunately, with leasing, funding for small businesses is fast and convenient with Advantage’s online application form or by phone at 800.949.7040. And of course, if you have any questions about whether leasing is the perfect option for you, give us a call.