Financing Your Startup
If you’ve got a great idea for a business with an original product or service that will occupy a niche place in the market, you want to get started soon before you have to compete straight out of the gate. Of course, you’ll need to make a few things happen before you can start production, and one of the biggest barriers of entry for you could be the cost of obtaining equipment. Inevitably, you’re going to need to do some shopping before opening your doors: computers, phones, copiers, vehicles, and if you’re manufacturing, the machinery necessary to do that. This is where equipment leasing can help you out.
Avoiding the Financial Challenges of a Startup
One of the hardest things to do as a startup is obtaining funds. Traditional ways of doing this can be very time-consuming and risky. Finding and convincing investors to fund your startup can be demanding of both your time and in some cases future earnings, and getting approved for a traditional bank loan can be nigh on impossible with no financial history or business property to serve as collateral. SBA loans can be a great option, but they do restrict the application of funds and can be very difficult to apply for.
Equipment leasing comes with none of the above challenges. It’s just like renting an apartment – you find a company that has the equipment you need, and you come to an agreement whereby you take ownership of the equipment and use it in exchange for monthly payments. This allows you to get the best equipment, be it the biggest vehicle or the most state-of-the-art manufacturing equipment to get your business off the ground, but without the huge expenditure at the outset. Your agreement will include the lease term and the interest rate you’ll be paying, but all of that is at a pre-determined rate that you pay monthly. It’s an expense that you can count on and consider in your budgeting.
Other Advantages
A lot of equipment leasing arrangements include a lease-to-own clause, whereby you can choose to purchase the item at market price after your lease is up, you can. This is a great option if the equipment in question doesn’t get big technology upgrades frequently. On the other hand, if it is a quickly obsolete item, you can simply choose to lease the newest iteration each time your lease term ends.
With so many great features, this financing tool can always help a business out, no matter whether you’re just starting up or have been open for decades. That said, it can be an especially helpful tool when starting.
