Construction Equipment Financing
It isn’t uncommon for construction companies to finance construction equipment. After all, this type of equipment is expensive, yet it is necessary to perform the work. If you are considering getting a construction equipment loan, here are a few reasons why it’s a good idea:
Flexible Financial Solutions
When it comes to financing construction equipment, there are a number of solutions available at your disposal. In addition, these solutions – particularly construction equipment leases – can be extremely flexible and tailored to your cash flow, tax or accounting needs.
Flexibility with Business Cycles
Some specific types of loans and leases will allow for certain flexibility when it comes to your business cycles. For example, you may be able to lower your payments for a pre-determined amount of time when revenue may not be coming in while you’re getting a project up and running. Another example would be with fluctuations based on the season.
Preservation of Capital and Credit
Most businesses don’t have a lot of capital, especially if they’re just starting up. Some don’t have any that they can spare at all. For some businesses, it can be hard to throw $200,000 on a new piece of equipment – or even a used piece of equipment – when you don’t have the certainty that you will yield the desired return. Whatever your situation may be, financing construction equipment is a more suitable option over spending cash any day when it comes to uncertainty regarding ROI, efficiency and future sales. In the end, you’ll end up with a stronger cash flow and, if you make your payments on time, a higher credit score, which can come in handy in the future when you need to expand your business.
Expense Planning Is Improved
By not offering a considerable sum of cash to purchase a piece of construction equipment, you can maintain even and consistent expense planning by opting for a construction equipment loan. This ensures you don’t have to worry about major fluctuations in your financial budget, while also maintaining consistent budgeting and cash flow.
Reduced Risk and Expenses
If you opt to lease the construction equipment, you will be able to mitigate the overall risk of a new purchase and reduce overall expenses. You will be making fixed monthly payments and the equipment will be listed as an operating expense rather than a liability or asset. When you have little to no liabilities, your balance sheet will appear much stronger. At the same time, you won’t have to worry about the equipment’s resale or scrap value since the equipment can be returned when the lease is up.
Generous Tax Deductions (Section 179)
For 2016, you can claim up to $500,000 when you finance new or used equipment. You can then write it off during subsequent years based on depreciation values as set by the IRS. Make sure to consult with a financial or accounting expert to learn more about the Section 179 tax deduct ion and how to qualify.
Construction Equipment Obsolescence
New technology is always coming about, which means the equipment you purchased a couple of years ago is probably already out-of-date. By opting for construction equipment financing in the form of a lease, you can make sure that you always have the latest equipment at your disposal. You can return the equipment at the end of the lease term, trade it in for the newest model or purchase it if you desire.
If you would like to learn more about construction equipment financing, don’t hesitate to contact First Capital Business Finance via our short online form or by giving us a call at 888-565-6692. We are here to help you succeed in your business!