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How Leasing Equipment Can Help Your Startup Succeed

​​Starting a business is always a risk, but it can be less of a gamble if you lease the equipment you need to get started. It eliminates the need for large upfront capital expenditures, which can be difficult for startups to come by. In other words, leasing will help you to reduce risk and give your startup the best chance at success! Here are the most important reasons why it may be a good idea for your startup.

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Equipment leasing can provide startups with the tools you need to succeed

Leasing equipment can provide a startup with the necessary tools to succeed for a few reasons. First, leasing can be a more affordable option for a startup than purchasing outright. Second, business equipment leasing can provide a startup with access to the latest technology. And finally, leasing can help a startup manage its cash flow. 

Let’s take a closer look at each of these benefits below.

It can help you avoid large capital outlays and preserve cash flow

Equipment lease can help you avoid large capital outlays and preserve cash flow because it allows you to spread the cost of equipment over the term of the lease. This can be helpful for startups that are tight on cash flow. Additionally, leasing equipment can often be more tax-efficient than buying outright, which can also save you money.

If you’re a startup owner considering equipment leasing, be sure to talk to a financing broker to see if it makes sense for your business. We can help you weigh the pros and cons of leasing vs. buying equipment and make sure you are getting the best deal possible. 

You can lease the latest technology

From office hardware, to heavy machinery and vehicles: leasing can help your startup to get the latest technology and be competitive.

Here are some things to keep in mind when considering leasing for your startup business:

  • This type of equipment financing is a great way to get the latest technology without breaking the bank. By business equipment leasing, you can get access to the latest models and features at a fraction of the cost of purchasing outright.
  • It can help you to keep up with the competition. If your competitors are using the latest technology, you’ll need to be able to match them in order to stay competitive. 
  • It can give you some flexibility when it comes to upgrading or expanding your equipment. If you need to upgrade your equipment sooner than expected, or if you want to add new equipment to your business, leasing can give you the flexibility to do so.
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What you need to keep in mind when leasing equipment for a startup

There are a few things to keep in mind when considering leasing for your startup:

  • The total cost of ownership: when you lease equipment, you’re only paying for a portion of the equipment’s cost. 
  • The length of the deal: most leases are between two and six years.  If you have equipment that will need to be replaced frequently, a shorter lease may be a better option.
  • Maintenance and repairs: you may be responsible for maintaining and repairing the equipment during the lease, or you can include these expenses on the lease agreement.
  • Upgrades: you may be able to upgrade the equipment during the lease.  This can be important for companies that rapidly change and improve equipment.
  • End of lease: you’ll have to decide whether to purchase the equipment at the purchase option amount (residual).

FAQs about startup equipment leasing 

What is an equipment leasing broker? 

A lease broker is a specialized company that helps startups and businesses finance equipment. The best leasing companies, like Finco, work with different lenders to get the best deal for their clients. 

Why is leasing equipment better than buying? 

When you lease equipment, you are able to avoid many of the initial costs that come with purchasing. These costs can include the price of the gear itself, as well as the cost of transporting, installing and maintenance. In addition, you may be able to avoid sales tax. This can save you a significant amount of money, especially if you are leasing multiple pieces of equipment.

Is leasing equipment tax-deductible? 

Yes. Leasing can be a tax-deductible expense for businesses.

Can you lease used equipment? 

Yes, leasing companies may offer this type of business financing. Used equipment can be a great option for startups because it is typically less expensive than new equipment, but it still has plenty of life left in it.

Do I need to make a down payment for an equipment lease? 

Down payments are typically not required for equipment leases, but it is important to check with the leasing company to confirm. Making a down payment may help you secure a lower monthly lease payment, so it is worth considering if you have the funds available.

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Can I lease equipment with a poor credit score? 

Yes, you can lease equipment with a poor credit score. However, the terms of the lease may be less favorable than those offered to borrowers with better credit scores. Additionally, the equipment leasing company may require a higher security deposit or a co-signer in order to approve your lease.

Can I include documentation fees in an equipment lease application? 

Generally, equipment lease applicants can include these fees as part of their equipment lease application. These fees are typically used to cover the costs associated with preparing and submitting the application, such as the costs of credit reports or legal services. They can vary depending on the equipment lease provider, so it’s important to check with the provider before submitting an application. Equipment lease companies typically charge a flat fee or a percentage of the total equipment cost.

Is leasing the most flexible financing option for startups? 

It depends on different aspects related to your project and business. However, leasing is, without a doubt, one of the most flexible financing options.