Several backhoe loaders in single-file line
Several backhoe loaders in single-file line

Equipment Financing: Which Option Is Right For You?

The management of a thriving business requires a constant pulse on financial considerations. For instance, if you have to finance new or replacement equipment, which of your options best balances your equipment need, usage, cash flow and other financial objectives? Some considerations to think about - how long the equipment will be required, how much cash is required upfront, and what your desired monthly budget is. Typically, equipment is financed through a loan or lease. Each has its advantages.

With a lease, you pay to use the equipment but don’t own it. This type of financing also optimizes the value of the tax depreciation and can reduce the after-tax cost of the capital compared to a loan. It can be a great option when you only need the equipment for a shorter time period or it’s more specialized.

You can also finance the purchase through a loan and buy the equipment over time. A loan lets you preserve your company’s cash reserve. And be strategic with payment time horizon and amount. Many different types of loan options are available and some even have potential tax advantages. Plus you get the benefit of owning the equipment at the end of the financing.

Whichever your company chooses – loan or lease – it’s smart to work with a team that takes the time to understand your situation. Find a group with the knowledge and expertise to help you navigate the options. It’s also helpful to find a financing team familiar with the local situation that can act fast to help you secure whichever financing approach you decide to use.

The right financing can make all of the difference and set your company up for success. To learn more, reach out to your First Financial Relationship Manager, who can help advise you on your lending and leasing options.