Eventually, there comes a time when the equipment in your company needs to be updated. This could be the hardware you use, your company vehicles or even just the furniture you have in your office. Of course, upgrading all of it at once can be a significant expense, so it’s important you find the leasing or financing strategy that fits into your budget while allowing you to get all the equipment you need.
The benefits of leasing and financing are simple. Leasing is a great option for equipment you intend to use for a limited time before upgrading again, such as computers and other technology. It allows you to get the equipment you need at low monthly rates without having to pay full price in the long run, before you update again.
Financing, meanwhile, is a great option for equipment that you plan to keep for many years to come, such as furniture or vehicles. Eventually you will have paid for the full cost of the equipment, which saves money over leasing after a certain point.
Some of your specific financing options when you are looking to upgrade your business equipment include:
- Equipment finance agreement (EFA): An equipment finance agreement is something of a bridge between a loan and a lease. The conditions are very similar to a lease, but there is less liability on the part of a lessor. For example, if you need to lease manufacturing equipment and the use of that equipment causes a death at your facility, an attorney could help sue the owner of the equipment. Under a lease, the owner is the lessor, but under an EFA, it’s more of a borrower/lender arrangement, which puts more liability on the user. Basically, an EFA combines the benefits of loans and leases for both the borrower and the lender.
- Leases: Most people are familiar with the concept of a lease. This is a contractual agreement in which a lessee pays a lessor for the use of some sort of asset (in this case, business equipment). Ownership remains with the lessor, and the lessee leases it for a certain agreed upon amount of time.
- $1 Out Lease: In this specific lease arrangement, the borrowing company makes payments on the equipment and eventually, when the lease term ends, “buys” the equipment for a dollar. This essentially makes it similar to a loan, except that you aren’t technically the owner of the equipment while making payments.
Fidelity Capital can make it easier for you to upgrade your business equipment, thanks to a short and simple application process with a quick, 24-hour turnaround time and less money down upfront. Let us help you unlock better business growth!