Did you know that 78% of US businesses lease or finance their equipment? This includes small businesses and Fortune 500 companies.*
Why? Because equipment leasing allows foodservice operators to preserve their working capital for everyday business expenses such as payroll, utilities, and more.
There are many types of equipment financing options. LeaseQ’s most popular options are Working Capital, Dollar Buyout, Fair Market Value, and Equipment Finance Agreement (EFA).
Here’s a helpful breakdown of some of the most frequently used equipment financing options:
Customers get the equipment they need and the cash to cover other expenses. It is important to note, this program is NOT an equipment lease financing option, it is a loan. Loan terms typically are between 9-18 months with a daily or weekly payment. The benefits of this option include:
Ease of Application: Fill out one application and submit the following documents once to secure this option: A completed application, last three months of bank statements, and an explanation of how the funds will be used.
Unsecured Loan: You do not need to pledge equipment, or any other collateral, to get the cash you need today.
Budgeting Made Simple: Make one payment for your working capital vs. paying on an equipment lease and loan. You will know the exact amount you will be paying back over the loan term, so it is easy to calculate your return on investment over time.
Flexible Use: Spend your cash on any business-related expenses you see fit.
Please note that the amount of capital and lease terms is subject to each applicant’s approval factors.
Fair Market Value
When this equipment leasing option is chosen, the lessee has the ability, but not the requirement, to purchase the leased asset at the end of the lease term. The purchase price is set at the beginning of the lease term. The benefits of this option include:
Lower Payments: Payments in this type of lease usually are lower than a bank loan.
Option to Own: The lessee has the option to purchase the equipment outright.
No Liability: The asset does not need to be included on the lessee’s balance sheet.
Tax Deductions: Lease payments may be tax-deductible. Please consult your tax professional for more details.
In this type of lease, the lessor owns the equipment throughout the life of the lease. The lessee retains ownership once the lease terms have been satisfied. The benefits of this option include:
Clear Terms: The buyout terms are stated upfront, so the lessee knows exactly what the cost of ownership will be.
Ownership Guarantee: The lessee can enjoy set monthly payments for the contract’s life with a guaranteed option to purchase the equipment at the end of the lease.
Equipment Finance Agreement (EFA)
This financing type combines a loan, promissory note, and security agreement into one financing option. It is one of the most frequently used equipment financing agreements. The benefits of this option include:
Tax Incentives: The customer may receive Section 179 benefits (https://www.section179.org/section_179_deduction/) while also claiming bonus depreciation the year the equipment is acquired. Please consult your tax professional for more details.
Preserves Working Capital: Financing eliminates cash flow constraints and gives the customer flexibility to reserve their working capital for everyday operating expenses.
100% Financing: The full amount of the equipment can be financed, and down payments may not be required. Installation, delivery charges, supplies, and more can be rolled into the lease if equipment is the dominant component of the transaction.
As you can see, working capital loans and equipment lease financing have numerous benefits that make our programs attractive to a wide range of operators. Entering into a lease agreement for those who lack the working capital to purchase the equipment outright. It is an excellent option for operators that wish to reserve cash for daily operating expenses and unexpected costs. It also allows operators to obtain a piece of equipment that they may not have been able to afford outright.
Let’s say you walk into an equipment dealer’s showroom with a budget of $9,000. You intend to purchase their equipment with cash. The salesperson shows you a piece of equipment for a few thousand dollars more that would better suit your needs, but you don’t have the additional cash to cover the higher cost. Once financing is discussed, you share you would be comfortable with a $500 per month payment. You can now get a $15,000 piece of equipment and you keep your $9,000 to use as working capital.
Working capital loans and equipment leasing are great tools to use to get the equipment you need to run your business well.
Contact our team today to learn more about how LeaseQ’s equipment financing options can help you and your customers thrive.
*Statistic is provided by the Equipment Leasing and Financing Association.