The US economy is finally moving forward after many years of depressed growth. Building permits hit a new eight year high according to the US Census Bureau, and rose 25.4% above the May 2014 estimate. Housing completions grew 4.7% above the revised estimate for April, and 14.5% above the May 2014 rate. “In fact, May permitting activity reached a (seasonally adjusted, annual) rate of 1.275 million, the highest level for the nation since August 2007, when the rate stood at 1.321 million.” According to Forbes magazine.
Growing equipment demand in an ongoing economic uncertainty led many companies to conclude that construction equipment financing is a key acquisition strategy. Equipment financing is as vital and as available as ever, enabling businesses to secure the equipment they need to achieve their construction objectives.
Here are some of the benefits of construction equipment finance:
Flexible programs – There are many types of financial solutions, including leasing, and they can be tailored to the needs of the business and its cash flow.
Low cash down – many equipment financing programs, especially leases, allow for small down payment, keeping the cash in the business. Some financial companies will finance as much as 100%.
Capital preservation – Financing instead of spending cash can help mitigate the uncertainty of investing much needed cash in equipment during volatile times.
Even expense planning – Financing construction equipment allows the company to keep the cash for the cyclical lean times, which exist in any business. Financing also allows the company to operate without huge budget fluctuations.
Keeping up to date with technology – With leasing, the company is sure to use the latest construction technology possible. The limited terms of leasing, for example, will allow renewal of equipment every three, five or seven years. Some leasing programs allow updating the equipment during the lease period.
Dependable asset management – Proper asset management – ensuring equipment is not under-utilized or over-utilized is the key benefit to financing or leasing construction equipment. Many financing companies provide asset management services that can track the status of the equipment.
Disposal of old equipment – Most companies are not equipped to handle sales of old equipment. It requires man hours to handle the sale and disposal of old equipment. Leasing enables the company to have the latest technology and updates without having the burden of getting rid of old equipment.
Reduced risk – All equipment purchase involves risk to the owner. Leasing removes many unnecessary risks allowing the company to focus on making money instead of worrying about it.
Tax considerations – What is best for your business? Having the equipment as part of your assets to increase the value of the company, or having is leased and not show it as an asset? Each company has its own set of criteria to follow, and tax benefits should be considered.