Technology Equipment Financing: 8 Tips to Know Before Signing
At some point, all business owners need technology equipment to sustain or grow operations. However, equipment costs can add up fast. In many cases, there’s a better alternative to a large technology equipment purchase.
Leasing equipment is a solution for U.S. business owners of all sizes to sustain operations and prosper in a highly competitive marketplace. It enables cash-strapped enterprises that need new technology to sustain operations or capture new business.
With an equipment lease, you can acquire the technology that you need to achieve your goals. The following are eight tips for quickly securing technology equipment financing.
1. Show the Lender Why You Need the Equipment
When applying for an equipment lease, show the lender how it will add value to your enterprise. For instance, new technology may enable you to better service your customers.
Alternatively, new equipment may empower your team to work faster. Also, your vendor may maintain the equipment, rather than your company absorbing that cost. You need to show that the equipment will, in some way, enable you to improve your operation.
2. Check Your Personal Credit
Before you apply for a lease, clear up any issues with your personal credit. Ideally, you check your credit regularly. If not, now’s the time to do it.
Credit reporting agencies handle massive amounts of information. As a result, things fall through the cracks. When this happens, a mistake can prevent you from securing a lease for vital technology.
A significant number of consumers have one or more mistakes on their credit reports. By making sure your report is accurate, you can increase your credit score as well as your chances of securing a lease with the best possible equipment financing agreement.
3. Research Financing Rates
If you’re considering a lease for technology, shop around. Don’t assume that banks and manufacturers will offer you the best deal.
Institutions and manufacturers rely on the fact that most people will not think of leasing alternatives. As a result, they may charge a steep premium for the service.
Compare rates and lease terms offered by various providers. Also, scrutinize fees and options. This process takes time, but it’s worth it for the savings that you’ll enjoy over time.
4. Check Your Business Credit
Your business credit profile is another major determining factor as to the approval and terms of your lease. You can build your business credit by paying invoices early. A favorable business credit profile will give you access to more options, better terms and lower interest rates.
Also, make sure that all your company information is accurate when you apply. Lenders will likely deny your lease application if it contains inaccurate or inconsistent information.
5. Don’t Request Financing from Multiple Lenders
Although you should shop around for the best deal, apply to only one lender. Financiers don’t like to see recent denials from other leasing companies.
The first thing a potential lender will wonder is why another financier rejected your application. Alternatively, lenders may worry that you may not have the ability to make payment on leases from multiple providers.
You can narrow down your leasing search by working with companies that specialize in financing for your industry. This way, there’s a higher likelihood that you’ll secure the technology lease that you need.
6. Understand Different Lease Options
It’s essential that you know the difference between a fair market value lease and a dollar buy out option. A fair market value lease typically offers low payments, flexibility in several tax advantages. However, with a dollar buy out option, you can own the equipment when the lease terminates.
The dollar buy out comes with higher monthly payments, however, you’ll have the advantage of depreciation and other tax incentives.
7. Combine Technology Equipment Leases
Whenever possible, arrange for technology and equipment financing in bundles. By leasing multiple assets, you can simplify payments and save on expenses.
If you’re thinking about leasing one technology product, evaluate whether your company could benefit from additional equipment. You’ll boost the performance of your business and save on monthly lease payments. Bundling leases is an excellent way to secure better terms for technology equipment.
8. Prepare All Essential Documents
Before you meet with a lender, organize crucial financial information. Present the lender with information such as your cash flow and balance sheet. A financier may also ask you for your most recent profit and loss statement. They may also want to review your bank account information, company assets and investments.
This information is a major determining factor as to whether a financier will issue your lease. By preparing your financial information ahead of time, you’ll instill confidence in the lender. The dollar buy out comes with higher monthly payments, however, you’ll have the advantage of depreciation and other tax incentives.
Leasing Technology Equipment Can Open Doors to Opportunities
Updating your technology equipment is essential to prosper in today’s competitive marketplace. Leasing can allow you to capture new business. In some cases, it can help you to survive. In the right situation, technology equipment rental is a viable alternative to a substantial, upfront investment in equipment. If you don’t want to outlay a large sum of money, leasing is one way to acquire needed technology and reserve cash for other important business.
For instance, if your business is rapidly expanding, leasing may make sense. Alternatively, you may need new technology to prevent a competitor from capturing a share of your market. These and other situations are ideal cases for looking into leasing options. An experienced technology lease provider can help you make a decision that’s right for your business. AvTech Capital offers a wide range of options to help you stay ahead of the competition in an intense marketplace.
Contact us today to speak with a knowledgeable representative that will craft a customized lease for your unique needs.