Simply put, construction equipment financing is the better bet if you’re a small-to-medium-sized business (SMB). By renting/leasing instead of buying, you preserve your working capital and give yourself a better chance at maintaining positive cash flow. If you want to remain competitive and grow to keep pace in your industry, these are a necessity. Let’s see some other ways that financing helps.
Construction Equipment Financing Stabilizes Budget Expense Planning
Even before accounting for taxes, financing reduces the effect that the otherwise big expenditures for equipment would cause. Furthermore, you can afford to acquire all the equipment you’d need for jobs at once. When it comes to taxes, asset depreciation taxes are a reality when you buy equipment outright.
Acquire Modern Equipment
This is one of the biggest advantages that construction equipment financing has over full-price purchasing. There are updated tractors, trailers, and shovelers being produced every few years; if you buy one outright, then you will be unable to afford to keep your inventory of equipment updated. When leasing, you can easily swap out older models for newer ones.
Financing Equals Risk Reduction
First of all, when you finance construction equipment you don’t have to worry about machine obsolescence. Your asset management numbers look much better when this crucial factor can be optimized. Your budget is much better off as a result, which is always a reduction in risk all by itself. The primary benefit of construction equipment, after all, is its use – not its possession.
Financing is More Flexible
This aspect of leasing or renting is somewhat akin to merchant cash advances, in that during seasons of low revenue generation, the terms of your lease can allow for smaller monthly payments. Of course, this is not necessarily a general expectation from lenders, but you can certainly find some that allow it. When a season of high productivity and thus revenue resumes, the monthly payments will rise – it’s all about the percentages.
Contact Revenue Park LLC today to learn more about our equipment financing solutions for construction companies.