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.

AvTech Capital Aids in Restaurant Opening

Restaurant Furnishings: When a new restaurant needed a variety of leasehold improvements to furnish its space and make it functional for opening day, it looked to Avtech Capital for help. Avtech assessed the customer’s needs and provided equipment lease financing to...

$57,243 Leased to Commercial Truck Retailer

Machinery Financing: Announcing a $57,243 equipment finance transaction for a company that sells new and used commercial trucks. Located in the southern United States, the company also offers replacement parts and accessories and provides vehicle servicing. Through...

Company Obtains IT Equipment through $158k Lease

Hardware Financing: AvTech Capital was pleased to assist this Mid-Atlantic limited liability company with a $158K equipment lease. The company operates or franchises hundreds of travel centers, standalone restaurants, and truck service facilities. As part of their...

AvTech Capital Finances Laser Device for Manufacturer

Technology Lease: AvTech Capital is pleased to announce a $151,415 commercial finance transaction for a manufacturer of composite parts and tooling. The company designs, develops, and manufactures production parts and tooling, primarily for the aerospace and...

$106,069 Lease for Auto Parts Company

Renovation Lease: Announcing the closing of a commercial equipment lease for an auto parts company. Operating in the Northeastern United States, the company stocks a wide variety of auto parts for both domestic and foreign vehicles. The company will lease $106,069 in...

$330,253 Leased to Wind Energy Company

Vehicle & Tool Financing: AvTech Capital is pleased to announce a $330,253 equipment lease for a company in the wind industry. Located throughout North America and the South Pacific, the company provides project management, maintenance, and staffing services for...

$5M Technology Lease for Electronics Manufacturer

Funding for New Machinery: Announcing a $5,052,835 equipment lease for a company specializing in precision plastic molding. The company manufactures parts for a wide variety of industries, including the computer, telecommunications, industrial, and medical industries....

AvTech Capital Provides $3.6M Lease to Manufacturer

Machinery Financing: AvTech Capital is pleased to announce a $3,603,518 equipment lease for a manufacturer. The company creates moulded plastic components which are used in medical and electronic products. Equipment for the transaction consists of a CNC machine,...

Healthcare Company Leases $956K in Dental Lasers

Medical Equipment Financing: Announcing the closing of a dental machinery lease for a healthcare company in the western United States. The company provides a variety of services including primary and preventive visits, dental care, mental health services, and case...

$460,000 in Funds for Printing Equipment

Machinery Lease: Announcing an equipment finance transaction for a company that provides printing and distribution services. Through an equipment lease, the company will acquire new inserting and drying equipment. This equipment will give the company the in-house...