Smart Things To Do When Leasing Equipment
An equipment lease can be a great choice for small businesses in need of equipment. Leasing makes it easier to obtain equipment without needing to invest a lot of capital in the transaction. This can help companies keep monthly costs down and use working capital for essentials, such as inventory or payroll.
To get the maximum benefits from equipment leasing, there are a few things business owners should do beforehand. This guide provides helpful tips that work for established businesses, startups, small businesses, and manufacturers.
Choose an Equipment Financing Partner With Experience in Your Industry
When getting a lease for equipment, it’s helpful to find a lender that understands the needs and circumstances of your business. That way, the terms are easier for your company’s operations and you can save money.
For example, some new business owners think that startups can’t qualify for a lease. If you get turned down for equipment leasing because you don’t have enough time in business, you just haven’t found the right lender yet. A good lender works with new businesses to provide the necessary equipment to get operations off the ground.
The same goes for industry-specific equipment, such as construction machinery, semi-trucks, specialized tools, medical equipment, and other systems. The more experience the lender has with other businesses in your industry, the fairer and more flexible the terms of your lease.
Prepare a Short Business Presentation
A common myth is that lenders base approval only on the numbers. In reality, your personality and a business plan may be the deciding vote for giving you an excellent lease. The key is to immediately show why you need the equipment and how it benefits your revenue. Knowing specifics can impress lenders significantly.
Get Your Financial Documents Ready
You also need paperwork to back up your words. It’s not necessary to have perfect credit to get an equipment lease, but showing good revenue or cash flow can help you. The better your money management abilities, the better the interest rates and terms you can get.
Do Your Research Before Applying
Another common mistake is filling out countless applications with many different lenders. This can hurt your credit score and make lenders nervous to boot. It’s better to research the terms offered by each lender online before filling in a final application.
That said, there’s nothing wrong with getting prequalified. Prequalification doesn’t show up on your credit report; it just shows you how much financing you can get.