With all of the different industrial equipment financing options available, it can be difficult for businesses to decide which of these is best for them. Industrial equipment leasing options have been designed to help all kinds of companies including seasonal, those with bad credit, and those with larger needs. Selecting the right financial option will allow a business to flourish and exceed its goals. The payment plans can be fully customized to meet a unique set of needs, but here are some of the main structures businesses should be aware of before making a decision.
Traditional Industrial Equipment Leasing
Businesses choose a traditional lease program when they want to 'rent' the needed items rather than buy them. This style of solution gives the company the opportunity to make low payments that are deductible on their taxes in many situations because they are considered an operating expense. The items are paid for at a fair market price, there is no end to the term, and it can be returned easily when it is no longer needed. This option is ideal for items that depreciate quickly.
Prepaid Or Capital Industrial Equipment Financing
Although it works similar to traditional leasing, the buyer owns the items. The plan involves a series of small payments that are paid until the end of the term when the purchase price and interest has been paid in full. Then, the buyer pays a small percentage of the original price tag and sometimes a single dollar to take over ownership of the items. For businesses with less than perfect credit, payments can be made ahead of time to further lower the payments and show you can make the payments.
Postponed Payment Plans
Created the same as the previous two industrial equipment leasing plans, a postponed or deferred payment plan gives companies two to three months before making their first payment. These are ideal for new businesses and those who will need a few months before seeing the return on their investment. Businesses get a few months to get up and running before having the added strain on their cash flow.
Seasonal industrial equipment financing is ideal for those who have seasonal income such as those in the agricultural or road construction industry. Because these businesses make their profit in a few select months, making large payments during the off-season can be extremely difficult. This plan lets businesses decide which months they will make payments, the amount of each, and the total length of the plan. Depending on the agreement, companies may have to make small payments during the off-season, which generally adds up to the interest only.
Businesses that purchase equipment who then change their mind and wish they had taken payments have an option as well. With a sale-leaseback or leaseback option, the company sells their items to the financial institution and sets up industrial equipment leasing to buy them back for payments that generally last for three months until it is paid. This frees up cash flow and allows the company to invest in things that increase in value rather than depreciate.
Progressive Payment Plans
This is a common payment plan for those such as contractors who purchase items needed for a series of upcoming contracts that will see their profits increase as the term goes on. Instead of having a standard payment, these plans have payments that start small and gradually get bigger to match increasing profit levels and pay the financing out faster.
Businesses that will require a large number of equipment pieces in a certain amount of time often choose a master industrial equipment financing plan. The agreement as a whole is configured and signed. Then, as they need and acquire the items, a separate term and term length is assigned for each purchase. This makes large investments far more manageable.
Industrial equipment financing needs to be affordable yet large enough for companies to get the equipment they need to reach their financial goals. The right industrial equipment leasing plan will give companies the freedom to pay what they need to when they can afford it to enable them to be as successful as possible.