Equipment leasing allows your business to access expensive machinery and equipment without depleting vital working capital. The lender owns the asset in question and makes it available for use, so providing an alternative line of credit for your business.
Flexibility is built in at the end of an equipment leasing agreement, allowing you to act according to the market conditions at the time, and factor in your own business performance. This type of leasing arrangement enables your company to grow in a sustainable way using fixed term lending arrangements.
There are two types of equipment leasing – finance leases and operating leases. Finance leasing arrangements continue for the majority of an asset’s useful economic life. Operating leases on the other hand, are generally in force for only part of the useful life of an asset.
Ownership does not transfer at the end of either type of equipment lease, but you are able to use the asset as if you were the owner. The lender cannot repossess as long as you comply with the agreed terms throughout the lease period.
New and growing businesses use equipment leasing to access high quality assets that might otherwise be out of reach financially. Established companies also recognise the value of equipment leasing, using it to retain control of their cash flow and optimise business performance.
Industries commonly taking advantage of equipment leasing include construction, manufacturing, and agriculture. Construction businesses do not tend to use expensive equipment on a long-term basis and benefit greatly from the flexibility offered by leasing arrangements.
The type of lease agreement also assists seasonal businesses, including those operating in the farming and agriculture industry, as it allows them to control their outgoings more effectively.
Real Business Finance are equipment finance specialists and can help you decide whether equipment leasing is right for your business. We have contacts with more than 50 of the best commercial finance lenders in the UK. Please contact one of the team to arrange a free initial consultation.
16th September 2019
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