Borrowing from the bank for your small business might seem like a risk. Some might say that it is best to stay out of debt and start with what you can afford, which would mean not borrowing money for start-up equipment. Here are five ways equipment financing can be a sound investment, and can help put your business in a better position to start generating profit.
1. Equipment is a Better Investment than Cash Loans
Equipment financing can often have lower interest rates than standard monetary loans. While you can have more flexibility with cash, it might not be worth the interest rates associated with the loan. If you are focused and know exactly what your equipment needs will be, you can directly have lenders finance the equipment needed. Often times this can lead to a lower interest rate than with a standard monetary loan.
2. It is Better to Finance than to Lease
By not simply renting equipment, you will eventually own what is financed outright. The good side of this is that you can eventually own everything within your company once you are on your feet. When you get to the point of owning your own equipment, you are free to sell and upgrade in the future.
3. Equipment can be the Key to Your Business Success
If the equipment you need will bring in more capital, directly financing for this is a must. You might not be able to get off of the ground without specific pieces of equipment to move your business forward, enable efficiency or increase productivity. It may be well worth it to initially finance important equipment for your business.
4. Financing will Bring You a Tax Deduction
When you are paying off a lender for your business, any interest paid will be tax deductible. This can be a great payout during tax time, and can lead to substantial refunds that you can reinvest into your business.
5. Keeping Your Autonomy
Borrowing equipment keeps the autonomy with the owner. The alternative of finding an investor would mean that they would have a say in the business and even the day-to-day operations of your business. By financing your business, you are borrowing - but not partnering - which keeps you in control of your business.
Equipment financing can actually build your business and start making you money, while keeping your business autonomous. Make sure you have everything you need for a successful business, which can eventually lead to a profitable business.