Most everyone is familiar with the "lease vs. buy" analysis when making a purchase like a car. But, if you're the owner of a fabrication or machine shop, what does this mean for you? When references to leasing are made in the machine tool industry, it generally means equipment financing. True, leases have become considerably less popular over the last 20 years vs. the equipment finance agreement/capital lease. So, why would you want to finance your next piece of shop equipment instead of just paying cash or using your line of credit at your local bank? Here are four top reasons to consider:
1) "Cash is King"
I wish I was the one who coined this phrase, as we’ve all heard it so many times, but it’s true. Cash is the life's blood of your business and preserving it for items that are not financeable and/or for business emergencies is always a smart practice. I can’t tell you how many times a customer has called in a cash crunch needing to pull money from equipment they’ve purchased outright.
2) Maintain Your Bank Lines of Credit
Equipment financing is an alternative to your bank and not in competition with your longstanding relationship. Banks serve a valid and important function in providing credit. Are you considering buying your own building or expanding your current facility? The additional exposure from your equipment purchases on your credit line could prove problematic when you need a larger loan commitment.
3) Availability of Attractive Financing Programs
Your time is as valuable as your cash. Obtaining credit for your manufacturing equipment purchase is fast—it also provides you with flexible repayment options. The industry-wide use of the application-only product has made the process seamless and extremely user-friendly. It takes only minutes to complete the application and, within a short period of anywhere from a few hours to possibly one day, your approval terms are presented and you’re back to making parts.
4) Expand Your Business More Rapidly
When your hard work pays off and the orders start to roll in, you may end up with the problem of needing a lot more production capacity in short order—and this can be a good problem to have. By utilizing equipment financing, you can expand your business quicker by adding more equipment to your shop than cash reserves and bank financing would otherwise allow. This increases/upgrades your production capacity while maintaining cash for items such as materials or electrical/plumbing improvements—which is made possible by financing your equipment.
Equipment financing is a beneficial tool when properly and timely used to grow your business. There are many options available in the market place so please contact me directly to discuss what specific needs you may have.
