If you’re looking to finance expensive equipment, there are lots of reasons to consider rental finance. Here are a few of them:
Fast delivery of equipment
Rental finance applications are generally processed very quickly, with answers given for most applications, within 24hours on receipt of all the required information. The equipment will therefore be delivered quickly and with income generating equipment, this is an important advantage.
Rental finance allow you to match your hardware, software and equipment to your business needs, through the option of upgrading equipment at any time during the rental period, as well as flexibility when it comes to payments and the addition of more technology to meet your needs. Being flexible when it comes to payments, upgrades and the addition of more technology to meet your business’s needs means that a rental solution allows you the freedom to expand and grow your business at your own pace.
No large cash outlay
The capital outlays required for purchasing equipment can be substantial and therefore not possible for some businesses. With equipment rental finance, there is no deposit required and no significant cash outlay, which means you can keep working capital untouched and can be invested into other growth areas for the business.
You get all of the equipment and software you need to generate income and then spread the payments across the useful life of the equipment and technology without impacting your business’ working capital. Importantly, your company will be making the payments from future cash flows — in other words, from enhanced revenues that the company earns because of the rental of the equipment.
Easy Application Process
The equipment rental finance application process is fairly simple; you likely won’t need to provide as much financial paperwork as you would if you applied for a traditional loan. Equipment rental financing is also available for applicants with challenged credit who otherwise do not qualify from traditional banks.
Flexible Terms when the rental ends
Most finance rental agreements include several options after the rental ends. You can choose to:
- Purchase the piece of equipment. If you choose to buy the equipment you’ve been renting, the lender releases the title to the equipment to you
- Continue to rent the same piece of equipment
- Return the equipment
- Trade in your current equipment for a new or updated piece of equipment (and start a new rental for the new equipment)
Having the expenses amortized over the rental term allows your company to effectively budget over the term of the equipment rental. This means that you always know exactly how much cash you have available each month and can better plan your finances and cash flow accordingly.
Preserve your credit facilities with your bank
Another one of the important benefits of renting is that it allows you to preserve the available credit from your bank for additional working capital, expansion or acquisitions. When securing traditional financing for equipment through your bank, you usually exhaust your available credit. This isn’t a good option for any business wanting to expand or who may have cash flow challenges.
100% tax deductible
Equipment Rental is treated as an operating expense and is thus 100% tax deductible monthly. This is another important consideration in deciding which finance option is best for your company’s needs.
VAT is payable monthly and is regarded as Input Vat and written off against any output VAT collected.