Financing Equipment in Today’s Economy
The decision of whether to buy our lease equipment has always been a big debate for business owners. In today’s economy it is especially important to make the right choice. With the recession at full swing leasing has become a popular choice among businesses. Today 8 out of 10 businesses in the United States have some type of lease.
If the recession has taught us anything, it is to hang on to capital for a rainy day. Leasing can be a great way to maintain adequate cash flow while still having the equipment necessary to operate the business. It is much easier to finance equipment than it is to finance money for payroll. It is said in business that cash is king, and leasing allows for businesses to maintain higher levels of cash by not having to pay the full purchase price of the equipment all at once.
It has always been a rule of thumb for business owners to buy what appreciates, and lease what depreciates. It used to be that almost all real estate and property values increased the longer you owned it. Lately with less and less people buying real estate, the values have been holding steady, and even decreasing. This makes the option of leasing a lot more attractive. Most leasing agreements allow for a buyout at the end of the lease term. When the economy does pick up and property starts to appreciate again, there is always the option to buy.