Equipment Financing equipment financing/equipment loans

EQUIPMENT FINANCING

Given today’s economic climate and the rapid pace of technological obsolescence, more than 80% of companies utilize some form of equipment financing according to the Equipment Leasing and Finance Association reports. Equipment financing allows companies to procure equipment at a fixed rate, for a fixed period of time, without having to purchase the equipment from cash or working capital. Leasing permits you to avoid many of the uncertainties associated with equipment ownership and instead allows you to focus on using the equipment or assets to run and grow your business.

Explore Advantages of Equipment Financing

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Given today's economic climate and the rapid pace of technological obsolescence, more than 80% of companies utilize some form of equipment financing according to the Equipment Leasing and Finance Association reports. Equipment financing allows companies to procure equipment at a fixed rate, for a fixed period of time, without having to purchase the equipment from cash or working capital. Leasing permits you to avoid many of the uncertainties associated with equipment ownership and instead allows you to focus on using the equipment or assets to run and grow your business. / Equipment finance is a sort of small-business loan designed to help you buy the gear and equipment you need to run your company. An equipment loan can be used to buy everything from office furniture to medical equipment to farm machinery and commercial ovens.

Cash Flow

The preservation of cash flow compared to conventional financing is the most attractive benefit of leasing. A “true” lease can offer low cost financing because the lessor takes advantage of tax benefits that are passed to the lessee in the form of reduced payments. If the lessee cannot currently use tax depreciation to offset taxable income due to current operating losses, loss carry-forwards or alternative minimum tax, depreciation benefits may be effectively lost forever if the lessee purchases rather than leases.
Convenience/Speed

An equipment lease/finance transaction in many cases can be executed and completed in less time than traditional financing alternatives.
Conservation of Capital Leasing

doesn't require the cash outlay for a large equipment purchase and can be used to overcome budget limitations. Existing cash position and lines of credit remain free and liquid for other working capital needs that have higher ROE and or ROA metrics.
100% Financing

Leasing provides 100% financing while a typical equipment loan requires an initial down payment. Most “soft” costs incurred in acquiring equipment can be financed by the lease. These costs include delivery charges, interest charges on advance payments, sales or use taxes, installation and training costs. Such costs are not usually financed under alternative methods of equipment financing.
Tax Advantages

A lease can be structured either on or off balance sheet. As an expense, lease payments reduce tax liability and can be structured to qualify as an operating lease under FASB 13 for financial reporting purposes. The choice depends on your accounting objective and other cost trade-offs that you are willing to make in order to achieve your strategic objectives.
Equipment Life Cycle Management

Leasing permits regular upgrades to reduce obsolescence risk with equipment life cycle management.
Improved Return on Assets

Many companies place a heavy emphasis on ROA and ROE for evaluating profitability and performance. Operating leases often have a positive effect on ROA and ROE as equipment and project costs are paid for in “cheaper” future dollars.
Industrial Revenue Bond Limits

When the costs of a plant and equipment to be financed by industrial revenue bonds are expected to exceed statutory limits, equipment can often be financed through a lease to keep the project within the bond's capital expenditure limits.

List Of Documents Required For Equipment Financing

Details of the asset being purchased and its supplier details
ITRs of last 2 years, along with audited financial statements
Registration proof of the business, like partnership deed or certified copies of Memorandum of Association/ Articles of Association
Recent passport size photographs of applicant/co-applicant
Address proof of business
Resident address proof of applicant/co-applicant
Bank statement of last 6 months
Know Your Customer (KYC) documents
Identification (ID) proofs, like Voter ID, Passport, Aadhaar Card, PAN Card, etc.