Benefits of Leasing Equipment

What Heavy Equipment Leasing Can Do for Your Business

In order to operate at full capacity, most businesses need updated heavy equipment, software, transportation, and/or machinery. The average cost of these upgrades range from $100K – $15 million, contributing to a considerable, sometimes unmanageable, expense to your business’s capital budget.

With considerably lower ownership costs coupled with more payment flexibility, leasing heavy equipment is a practical option for most businesses.

Essentially, leasing is a method to rent an asset for a fixed time period. As a result, leasing provides a lower payment than buying, therefore, unburdening the strain on your capital budget. We will discuss some of the other major benefits of leasing heavy equipment.

1.    Upgrade Obsolete Equipment

As a growing business, you may have to refresh your technology in multiple areas every two to three years. That means if you purchase heavy equipment, you will eventually be stuck with obsolete equipment that you will have to recycle or sell.

Depending on your type of business, heavy equipment leasing could help you stay on top of the most recent advances in technology and equipment. Figuring out how long you are planning to keep the asset is a major factor when considering leasing.

If you plan to keep the equipment for the short term, it is likely that you will find leasing a much better alternative than buying it. Furthermore, the strains that come with trying to resale your equipment when the time comes to upgrade is no longer something your business has to deal with.

With AvTech Capital, we are able to offer the lease term options that best fit your upgrade schedule. So, if you work with technology or equipment that is constantly being improved upon, you may go with a shorter lease term to ensure you are always at the cutting edge in the industry. AvTech Capital commercial equipment financing ensures that you reach that goal.

2.    A Lender for Every Type of Equipment

Lenders usually specialize in different kinds of leasing, like finance leasing, contract hire, lease rental, and operating leases, and they are all a little different.

It often depends on the type of equipment being leased (e.g., hard assets, such as plant machinery, or soft assets, such as office equipment) and what you intend to do with the equipment when the lease term concludes.

Leasing means that you will not own the equipment or asset at the end of your lease term, and you can either choose to return the asset, continue your lease, or buy the equipment at the end of the lease term. AvTech Capital serves many industries such as technology, manufacturing, leasing, transportation and airlines and offer customized equipment leasing structures that work best for you.

 

3.    Control and Conserve Cash

When purchasing equipment, your business might have to tie up various lines of credit and/or cough up a significant sum in order to acquire the asset or equipment it needs. But if you lease the equipment, you can use those lines of credit as well as your operating capital for other purposes such as advertising, expansion, or other aspects that will help your company grow.

Leasing heavy equipment helps save your working capital (such as bank credit lines) for daily or recurring business expenses. Apart from saving your crucial working capital, with an equipment lease, you have a fixed monthly line item; this could help you budget more efficiently and effectively.

So, with expected monthly expenditures, you can easily devise long-term plans and strategies for your company with confidence. Not only will you have the equipment that you require, your business’s operating capital will be minimally affected, leaving room for other various expenditures.

4.    Easy to Upgrade

Leasing is unique in that it allows your business to address the issue of technological obsolescence. In case you use your lease in order to get assets that may get outdated in a short span of time, like high-tech equipment or other expensive machinery and software, a lease will transfer the burden of obsolescence on the lessor. Keep in mind that you’re free to lease the latest, higher-end equipment after the lease expires. This ensures that you stay updated on the latest technologies.

Many businesses decide to return their asset or equipment to the supplier by the end of their lease term, after the heavy equipment has served its purpose. On the other hand, some choose to buy it outright at the conclusion of the lease period, or upgrade to an advanced or updated version. AvTech Capital is able to cater to every business’s individual, unique financial needs, therefore, providing the financing options that are built specifically in your best interest.

5.   Lower Your Tax Liability

Some of the more overlooked benefits of equipment leasing are the tax breaks that most businesses can enjoy when they decide to lease instead of buy. For example, under Section 179 of the US federal tax laws, the IRS has given equipment leasing a tax exempt status.

Most equipment leasing can be deemed as a type of corporate expense for tax purposes. So, at the end of the fiscal year, you are able to deduct these amounts to lower your business’s tax liability. If an equipment lease is structured the right way, you might be able to expense 100% of the payment. On the other hand, on a traditional bank loan, the interest on the loan is the only deductible. Although it is advisable to consider all the financing options, a lease may bring immense tax advantages to your business. By lowering your tax liability, you can improve your bottom line. 

We recommend checking with a tax consultant or tax advisor to determine the exact tax benefits of leasing for your business as every business is different.

 

6.    Balance Sheet Benefits

With an equipment lease, you are often permitted to exclude leased assets as well as related financial obligations from the balance sheet. These moves can help improve your financial indicators i.e. company earnings-to-fixed-assets ratio or debt-to-equity ratio. However, bear in mind, that accounting standards and rules require balance sheets to report equipment leases under specific types of agreements and to check with an accountant for your specific applicable rules and laws.

Final Thoughts

These are just some of the many benefits of leasing heavy equipment for your business instead of buying it outright. The optimal decision will depend on your business’s specific financial situation, so, it is important that you have an equipment financing company like AvTech Capital help you discover your best options in finding a lease structure that works for best for you.

Your Heavy Equipment Leasing Experts

AvTech Capital team of financial experts work tirelessly through all of our heavy equipment leasing transactions tailored to every client’s unique and particular needs. As a result, our customers are able to operate their businesses with optimal operating capital while also providing them with top of the line equipment. Talk to any of our financial experts today and start optimizing your business.

AvTech Capital is a proud member of AvTech Financial Group, an association of companies that provides a range of financing and servicing solutions to clients throughout the United States.

$5 Million Leased for Tour Boats in Alaska

Lease of Marine Vessels for Alaskan Tour Operator: AvTech Capital is pleased to announce a $5 million leaseback transaction for an Alaskan tour company. This leaseback reimbursed the company for the building of several tour boat vessels used for whale watching and...

$215,000 in Financing for Hospitality Company in Alaska

Yellow Iron and Truck Lease: AvTech Capital is pleased to announce a $215,000 leasing transaction for an Alaskan company dealing in tourism support, construction, transportation and power generation. The leases were used to acquire yellow iron, trucks, trailers and...

$150,000 Lease for New England Grocery Stores

Lease of Self-Checkout Machines for Massachusetts Retailer: AvTech Capital is pleased to announce a $150,000 leasing transaction for a retail company in Massachusetts. The funding was used to acquire self-checkout machines for their existing grocery store locations in...

Equipment Lease for Construction Materials Retailer

Truck and Forklift Lease: AvTech Capital is pleased to announce a $150,000 leasing transaction for a construction materials retailer with locations around the U.S. Over two schedules, AvTech provided financing for trucks, trailers, and forklifts. This equipment helped...

Over $1 Million Financed in Construction Equipment

Construction Equipment Lease: AvTech Capital is pleased to announce a $1,373,000 leasing transaction for a site development company in Virginia. The lease was used to finance and refinance construction equipment that is being rented month-to-month. AvTech's assistance...

$600,000 Financed for Oil Refining Company

Commercial Truck Lease: AvTech Capital is pleased to announce a $600,000 leasing transaction for an oil refining company in Texas. As a follow-on to previous transactions, AvTech provided financing for trucks to support the company's growth in Texas and Ohio. AvTech...

$433,000 Financed for Emergency Generators

Generator Equipment Lease for Plumbing and Electrical Company: AvTech Capital is pleased to announce a $433,000 leasing transaction for an electrical, plumbing, and mechanical company. AvTech provided funding for the contractor to acquire generators. These generators...

How Farmers Strategically Protect Profit Margins

Farmers Use Capital Asset Leasing to Strategically Protect Profit MarginsThe agricultural marketplace has experienced rampant transitions and upheaval in recent years. Changes in food trends and growing populations have always had an impact on the success of U.S....

How Does Business Equipment Financing Work?

How Does Business Equipment Financing Work? As a responsible business owner, your top priority is always going to be the company's bottom line. You want to ensure the organization continues to make the most of its investments. In today's modern Digital Era, this even...

Kentucky Kingdom Talks About the Integral Role AvTech Plays

Kentucky Kingdom and AvTech Capital worked closely together to build one of the most unique roller coasters in the country. The wooden roller coaster's unique seating system allows children and adults alike to take part in the adrenaline packed experience. Ed Hart...