The Benefits of Equipment Leasing for Startups

If you want to get your startup off on the right foot, you need to know how to supply it with all the resources a growing business could need. Unfortunately, the world isn’t set up to make that too easy on you. Most lenders won’t work with startups, and the specialty programs that do cater to them tend to come with a lot of restrictions.

When you’ve got more working capital than those programs allow and you need financing, it can be hard to find options, and that’s why so many entrepreneurs start looking at equipment leasing.

Benefits You Never Expected

Leasing has a number of benefits most entrepreneurs overlook at first, but when you really dig into the details of a lease deal, you’ll find a lot of the extra overhead associated with equipment ownership ceases to be an issue once you’re leasing instead of purchasing. For starters, the lease is a business expense and not an asset investment, so it impacts your tax obligations quite differently. It also comes with the ability to upgrade as you wish, simply by letting the lease go at the end of a term without renewal and then leasing a new piece of equipment.

Since you don’t own the machines you lease, delivery and disposal are both typically handled by the financing company. These expenses aren’t the only ones to disappear with equipment leasing. Depending on the exact terms of your lease agreement, your financing company might be picking up the tab for some or all of the maintenance for the machine.

When to Lease vs. Buy

For startups, it’s almost always a good idea to lease instead of buying. Almost always does come with exceptions, though. If you’re going to be able to get years or even decades of use out of a machine that is core infrastructure to your company and you’ve got the path to financing, that’s really the only time the purchase option makes more sense for your bottom line. For startups, that’s rare, but as your company grows, it’s a consideration worth weighing when you need to add equipment and expand.

Find Your Leasing Company

Not every financing company works with every industry, and not all of them are built to handle customers that are the same size, either. On top of that, each company has its own structures for payment and timing of the same. Don’t worry if it takes you a little while to find the right fit. Just keep doing your research until you find a match for your equipment leasing needs.

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