X-Banker

How Equipment Leasing Can Benefit Your Business

April 16th, 2008

By The XBanker

One of the biggest mistakes that I’ve seen entrepreneurs make is to confuse capital and cash. Confusing the two can lead to wasting valuable cash and limiting your business’s potential. I’m a huge believer in using a mix of capital including loans & lines of credit, trade credit, and equipment leasing.

When it comes to financing your business, the name of the game is preserving your cash and limiting your personal exposure. I’m surprised at how many people come to us seeking cash to purchase equipment, vehicles, or machinery for their business. If you have access to cash, the last think you want to do is spend it on equipment. Cash is king, and without it a company can not operate and pay its bills. Just about any piece of equipment can be leased (most of the time with little or no money down!). In most cases, it is the equipment that generates revenue for the business – so the equipment literally pays for itself. All the while, you are still holding your cash and enjoying the tax benefit associated with the lease.

Another advantage to leasing is that it is much easier to obtain approvals than with a bank small business loan or line of credit – because there is a secured asset involved. This also leads to more lenient approval criteria, which means you don’t need perfect personal credit to qualify. In fact, if you’ve properly built your personal credit, you can obtain corporation-only leases with no personal guarantees! There is also a lot of flexibility in payment terms and buyout options. Take advantage of this by customizing the lease to best match your situation and business needs. The process is quick, usually consisting of a one page application and a fast turnaround.

As you consider the capital requirements for your business, keep leasing in mind. Not only can you save money, but you can preserve precious cash for growing your business.

This entry was posted on Wednesday, April 16th, 2008 at 2:52 pm and is filed under Alternative Financing, Equipment Leasing, Finance Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Tomas Zubicek said at April 16th, 2008 at 8:03 pm

   Speaking personally, it is the natural “greed” of an entrepreneur beginner, wanting to own things right away, not to pay fees, or other interest charges. As time goes and experiences are mounting up, everybody (if they are still in the business after a while) realize sooner, or later the importance of a little free cash to use at anytime in the biz. acct.
   Most importantly, we all realize further down on the journey, the Real cost of the Capital…
   Very good post, people now have the choice. Either believe, what you saying here mr. X, or learn it the “hard” way, just like I did a long time ago…That is, that Cash is The King

   Thank you

2. The XBanker said at April 17th, 2008 at 12:25 pm

   Amen – Cash is King!

Leave a Reply

Name (required)

Email (will not be published) (required)

Website