Getting a startup business off the ground can be challenging, particularly when that business requires equipment to operate properly. It also may be difficult for a small business to get financing via a traditional bank loan. Fortunately, equipment leasing through an alternative lender can solve the problem of equipment needs vs lack of funds.
What is Equipment Leasing?
A lease for equipment is a legal agreement between the lessor (the company that owns the equipment) and the lessee (the business that leases it).
Who Can Lease Equipment?
You don’t need to be an established company to lease equipment, although you certainly can be. A startup may also qualify for such an agreement.
Some lessors have relatively stringent credit history requirements for lessees. If you have no credit or poor credit history, don’t despair. There are other lessors who will lease equipment to business owners with less than stellar credit records.
Here are some useful tips if you are considering equipment leasing as an option:
Why Leasing May Be the Solution
One of the top reasons for leasing equipment is the time factor involved. From the start of the application to receiving the actual funds, a conventional loan could take weeks to finalize (and sometimes, this process may even take months). Leased equipment can be easier to acquire in a much shorter time period.
In addition to being a timelier strategy, a lease is more cost-effective. This kind of financing can be more flexible in terms of repayment, and no down payment is required. Equipment leasing also enables small business owners to apply their capital to areas other than paying for equipment, such as recruiting personnel, payroll, marketing, and buying supplies.
Documentation for an Equipment Lease
Generally, you should expect to provide some of your most recent financial statements, as well as your tax returns for the last year. You will also likely be required to provide a lease proposal in writing. This proposal should contain details such as the equipment you need and the reason you need to lease it.
Do Your Research
Because leasing companies do not all have the same application standards, do your research before you apply. You won’t want to incur several application rejections because other lessors may view that as a bad sign. Instead, ask what factors might disqualify you, and find lessors with requirements that match your circumstances.
Equipment leasing can be a viable option for a wide variety of businesses. They may offer more flexible terms than conventional loans, and you can avoid the down payment that comes with other kinds of loans. If you are considering this type of financing, contact Grecco Capital today.