Financing Equipment with Business Loans

If you're thinking about leasing new equipment, do not sign that agreement just yet. In many cases, financing equipment with a business loan can be more cost effective and more beneficial than leasing.

First of all, leases are usually long-term commitments, and all equipment will eventually become obsolete. If your lease terms are longer than the lifespan of your equipment, you may hinder your company’s growth potential by using outdated equipment. When you own your equipment outright, you can sell your old equipment and upgrade to new equipment as your business dictates. You also have equity in the equipment you own, which you can use as collateral for additional financing.

Taking out an equipment loan also offers some tax benefits. In the year you purchase the equipment, you may deduct up to $25,000 of its value; amounts over that depreciate over several years. Find out more about the Elements of a Successful Business Loan Application.