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Why Would a Company Lease Their Software?

Edited – 1

Most small and medium-sized businesses need software to help them schedule appointments, manage customer relations, deal with finances, manage the supply chain, and advertise effectively. However, good software can be extremely expensive, which is why many firms opt for software leasing. Financing software for small business can be very effective because it reduces upfront costs and facilitates budgeting.

What’s more, it allows companies to remain more flexible and versatile, which is important in current market conditions. Because there are many leasing options, every business can find a solution that suits them well. Today, we’ll have a look at some of the reasons why leasing software is a good idea and discuss how you can get started with a leasing company.

Financing Software for Small Business: Why Choose Software Leasing?

When you lease a piece of equipment, the lessor retains ownership of it, and you are in essence borrowing the item from them. At the end of the term, you can either give it back, keep it, or exchange it for a different tool. For many small businesses, this is an easier and more cost-effective way of gaining access to the necessary equipment than buying everything outright.

Just like furniture, machinery, and industry-specific gadgets, software can be leased for a fixed term. This is great for businesses that want to spend less money upfront, remain more flexible, and regularly gain access to new programs. Good office equipment leasing companies can customize their leases, so they can serve both new and established businesses.

You Can Control Your Finances Better

For very small businesses, the cost of software can be kept low, sometimes even under $100 per month. However, as businesses grow, they often end up paying several thousand every month. This can eat into profits and reduce the viability of a business. If you’re struggling with rising software costs, you should think about leasing programs instead of purchasing them directly from the software company.

You’ll pay the same amount every month for the duration of the lease, so you’ll know ahead of time how much you’ll spend over the course of a year. What’s more, you won’t have to spend any money upfront. This is especially advantageous for new companies because it eliminates the need for funding, but it is also helpful for businesses that want to expand quickly and therefore need to minimize their costs.

You Get Access to the Newest Software

When you buy software, you are making a significant financial commitment to a certain product. When a newer version comes out or a better product gets released, you can’t just switch because you’ve invested so much in your existing software. This can hold back your company’s progress and stop you from making the most of all the IT solutions out there.

When you lease, you can choose to drop software that isn’t working for you anymore or upgrade to a newer version as soon as the term is up. At Noreast Capital, we usually offer leases that are between 12 and 60 months long, but if you’re not sure about a certain program, you might be able to lease it for less than a year.

You Remain More Flexible

Another major advantage of leasing is that you remain much more flexible. Because you haven’t spent a lot of capital upfront, you can easily switch course. This is particularly important in the current market environment because conditions are changing rapidly, and your customers’ needs might not remain the same over time.

For example, many companies that bought software and other equipment struggled to adapt during the COVID pandemic, when they had to pivot and offer new services due to social distancing regulations. In contrast, a company that leased its software could simply request a different program or cancel its lease when the term was up. This saved the business money and made it easier for them to alter their services to fit their customers’ new needs.

There Are Leasing Contracts for Everyone

Leases come in many forms, and they can be adapted to the individual company. When financing software for small business, it is usually sensible to choose a flexible lease, so you have the option to either keep using the program, return it, or select an updated version at the end of your term. When you get in touch with Noreast Capital, we will match you up with an account manager, who can help you gain access to the lease you need.

They will speak to you about your business’s background, your customer base, and why you would like to lease software. Then, they can come up with an agreement that suits your individual situation. If you’re a seasonal company, you can pay more during the busy periods than during your quieter months. Similarly, new companies can delay payments for the first few months so they have a chance to build up a solid customer base.

Leasing Is Tax Deductible

When you buy something, you might be able to deduct the expense from your taxes. However, you’ll only benefit from this deduction for one year, since you’re spending all your money upfront. When leasing, you have an ongoing expense you can deduct from your taxable income for years. This can be a more effective way of keeping your company’s taxes reasonable in the long term.

The exact deduction method and the amount depend on the kind of lease you take out and your business’s tax status. If in doubt, you should speak to a qualified accountant, who can tell you how and where to list your lease on your tax return.

Who Can Lease Software?

Most software leasing companies prefer to work with businesses that have a solid reputation and have been in operation for at least two years. To prove that you will be able to pay your lease every month, you might have to show your account manager your bank statements and trade references. Depending on your company’s industry and the type of lease you’d like, you might also have to provide financial statements.

Startups and businesses that haven’t had time to build up a reputation can still get a lease, as long as the owner has a solid financial background. If you’re not yet an established company, you’ll have to offer a personal guarantee to the leasing company. What’s more, you’ll need to provide documents like supplier contracts, pro forma financial statements, business plans, and the owner’s resume.

What Kinds of Software Can I Lease?

You can lease a wide variety of software, and you can select either one product or multiple IT solutions. Some of the most popular programs here at Noreast Capital include customer relations management software, business management software, accounting programs, scheduling software, and inventory and supply chain management programs. However, we also offer options that are specific to an industry, for example, graphic design software.

Should I Use a Leasing Company?

Many software companies allow you to lease their products directly from them. So, should you choose this option, or should you obtain your products through a dedicated leasing company? Using a leasing business like Noreast Capital is usually best because you’ll be able to lease multiple products from the same company.

If a certain program is no longer working for you, you can simply speak to your account manager and switch to different software. This isn’t possible when you’ve leased your software directly from the company. Instead, you’ll have to end your lease, find a new software company, and apply again. As you can see, this is much more of a hassle.

Should I Also Lease Other Equipment?

The best leasing companies offer a wide range of products. Once you’ve passed the application process, you can lease other products such as business equipment, office furniture, electronic gadgets, and even heavy machinery.

In many cases, leasing several items from the same company is a good idea because it allows you to conserve even more capital and take advantage of the above-named benefits of leasing. Since you won’t have to apply again, the process will be much quicker than if you had to work with each equipment manufacturer directly.

How to Get Started

There are many reasons why thousands of companies around the country are choosing to lease their software and other tools. If you believe that this could be a good strategy for you, you can start by calling or emailing an equipment leasing company. You’ll be matched with an account manager, who will let you know what documentation you have to provide.

Once you’ve submitted your application, you’ll get an answer within a few hours or days. Then, you’ll receive a line of credit, which you can either save for later or use to gain immediate access to the software. Any time you run into issues or would like to lease additional products, you can call your account manager.

Financing software for small business is often a good idea because it allows companies to stay more flexible and up-to-date and reduces the need for upfront financing. Almost all kinds of software can be leased, and there are options for various types of companies. Get in touch with us at Noreast Capital to find out more about our software leasing options and to open your first line of credit.

Why Software Leasing Is a Lifesaver for New Businesses

Your business needs software to run efficiently. If you’re looking for the best options out there, software leasing might be exactly what you need. There are plenty of benefits to leasing software, especially as a new business.

Why Software Leasing Is a Lifesaver for New Businesses

Even in industries that provide hands-on work, software provides important administrative assistance, keeps information organized, and ensures that everything that needs to get done is getting done on time. So that means that buying software is a necessary part of running a business, right?

Not necessarily. Buying software can be a huge expense, but instead of spending more money than you’d like to on the software you need, you might want to consider leasing it, especially if your business is brand-new.

What Exactly Is Software Leasing?

Just like you would lease anything else, leasing software means getting the software from a lender. The lender finances the software while the business uses it for a small monthly fee. This offers new businesses the opportunity to get the software they need without needing to spend the money to buy it themselves.

What Are the Benefits of Leasing Software?

Better Cash Flow

The first few years can be tough financially for new businesses, so finding ways to improve your cash flow is important. When you lease software instead of buying it outright, you’ll find it much easier to avoid strains on your budget. You’ll only need to pay a small monthly fee for the software, while the lender will shoulder the full cost.

More Flexibility

The software that you use initially for your business is going to be a huge help in getting your business up and running. But what about further down the line? At a certain point, your business’s needs are likely to change. So must your software.

But you might hesitate to switch up your software if you’ve paid upfront and don’t want to have to spend any more money. This is another major benefit of leasing instead of buying. It will be much easier to switch to different software, meaning you can always keep up with your business and customer needs.

No Worries About Obsolescence

One of the major downsides of working with digital technology is that there are constant upgrades and updates. This means that the software that you use can become obsolete pretty quickly. When you buy instead of lease, it can be hard financially to keep up with all the latest upgrades.

You’ll have a much easier time when you lease your software. Don’t worry about getting stuck with obsolete software because you can’t afford anything better. With leasing, it’ll be easy to switch to the latest software and keep up with the competition.

Lock in the Price

One of the biggest issues that businesses, especially brand-new businesses, need to face in today’s world is inflation. Prices are continuously going up—and by significant amounts, too. You might end up paying far more if you buy software later than if you buy it now.

This issue can quickly get complicated for new businesses who require software to function but don’t want to have to worry about paying a lot of money down the line for any upgrades you might need. With leasing, the price gets locked in, so you won’t need to worry about significant increases in cost.

Improve Your Business’s Credit

Your business is likely going to need to lease things aside from just the software you use. This is where your business’s credit score comes into play. Keeping a high score so you can get the best leasing deals and contracts will help your business thrive.

When you lease your software and make your payments on time, you are actively improving your credit score. This means that when you need to lease other equipment for your business, you’ll have an easier time getting the best rates.

No Down Payment Required

When you’re leasing certain kinds of equipment, or when you lease from certain lenders, the lender will require a down payment. Down payments, while they may not be the entire cost of the software or equipment that you need, can still put a financial strain on your new business.

If you decide to take advantage of our software leasing options, you won’t need to worry about putting down a down payment. You can finance 100% of the equipment and software that you’re leasing, and you may even be able to include costs for things like upgrades and installation.

Get What You Need Quickly

When you lease equipment and software, you likely don’t want to have to wait long to be able to use the products you’re leasing. New businesses need to be able to move quickly and gain an advantage over their competitors.

Unfortunately, some leasing companies or banks can take weeks to approve a lease. With us, however, you won’t have to worry about waiting that long. Approval will take just a few hours, so you can get what you need and start using it right away.

Tax Deductions

Having to pay taxes can put a big strain on your budget, even when you’re prepared to pay them. Finding ways to save money when it comes to taxes can help you set your business up for financial success.

In the case of most leases, you can deduct the monthly payments. Because the amount you can deduct changes annually, you should make sure that you work with a financial advisor during tax season.

A Customized Plan for You

We know that there’s no one-size-fits-all solution for any business. Your software needs are going to be different from your competitors’ needs. That means that your leasing needs are going to be different too. You need to make sure that you’re getting what your business needs to thrive.

When you lease from us, we’ll make sure that you get the customized leasing plan you need. You’ll easily be able to choose the terms of your lease, as well as what your payment plan should look like. Extend the terms if you need, and upgrade the software and equipment you’re using as necessary.

How to Choose the Right Leasing Company

What Kind of Software Do They Offer?

The most obvious factor to consider is the software that your business needs. We can provide businesses with all types of software. Whether you’re looking for advertising software, point of sale software, or accounting software, we will make sure that your business gets what it needs.

What Is the Cost?

You want to make sure that you are getting software that is effective for your business while also being affordable. That’s why cost is an important factor to consider when you’re looking into leasing software.

We want to make sure that all of our leasing options will provide you with what your business needs while staying affordable. We know that costs can add up quickly for new businesses, so we’ll ensure that our options are right for you.

What Kinds of Leases Are Available?

Different businesses will require different things from their software leases. Some businesses may prefer a shorter term, while others will want to buy the software out at the end of the lease.

When you lease your software from us, we can offer you several different kinds of leases. This includes FMV leases, which are designed to fit with IRS tax guidelines and ensure that you get all the best tax benefits from your lease. We can also offer leasebacks, capital leases, and operating leases.

Who Can Get a Lease?

Some equipment leasing companies may have certain requirements for businesses that choose to lease from them. You should make sure to ask what these requirements may be so you’ll know if this is the right company for you. For instance, many companies will prefer to lease to established businesses.

We will lease to both established and brand-new businesses. For new businesses, you may need to prove that the owners are in good financial health. You may also be asked to write up a business plan and provide other information to show that you are able to fulfill your end of the leasing contract.

What Are Your Options at the End of the Lease?

The lease itself isn’t the only factor to consider when you’re looking to rent software. You should also be aware of what will happen once your lease is done.

We’ll provide you with several different options once your lease is complete. You can return the software you are using without any further obligations on your end. You may also choose to buy out the software, or you can upgrade to different software among other options.

Starting a new business is an exciting venture, but there are a lot of costs that come along with it. You can save money by leasing software instead of buying it. Ready to learn more about how we can help you? Call us today at Noreast Capital.

New Business in Need of Expensive Equipment? Consider Leasing Instead

Increasing numbers of small and medium-sized businesses are embracing equipment leasing instead of purchasing all their tools, machinery, and furniture upfront. Almost anything can be leased, including office equipment, large machines, kitchen items, electronic equipment, and even software. When you lease an item, you have more flexibility, and you can keep your capital and re-invest it in your business.

This is important for new companies that are looking to minimize their startup costs as well as for larger businesses hoping to expand or open another branch. What’s more, company owners might be able to access better or more up-to-date tools, which enhance and facilitate business transactions. Today, we’ll have a closer look at why you should consider leasing certain pieces of equipment and how you can get started with Noreast Capital.

Why Should You Consider Equipment Leasing for Your Business? 

There are many reasons why companies lease some or all of their equipment. The most important one is that they have to spend much less money upfront that way. This might allow business owners to start their company with less money or to invest in expanding their operations at an earlier date than they otherwise could. But these financial benefits are just the tip of the iceberg.

Additionally, leasing allows you to remain more flexible since you can give back your equipment when it no longer suits you. That way, it’s easier to pivot if market conditions change. You might also be able to access better items than you otherwise could, and you can exchange your equipment when it becomes outdated. This is particularly important for people who are looking to use software or other tools that evolve very rapidly.

You Can Keep Your Capital

Established businesses that are making a profit usually have some capital to work with. Therefore, the owners might wonder whether they should use this money to buy their equipment upfront since it might be slightly cheaper. The best course of action depends on the individual business’s strategy and situation, but in most cases, leasing equipment and using the money to expand the company is better than spending everything on tools.

For example, a company that is hoping to expand its operations to a new city in the next few years could lease its equipment and move up the timeline of the expansion. Similarly, a business that is opening a new office in town could do so faster by leasing some of the furniture and buying only the essentials. If you’d like to maximize your firm’s profit, leasing is a great tool.

You Can Remain Flexible 

When you purchase an expensive piece of equipment upfront, it might take you five to ten years to recuperate your investment and profit from the tool or machine. This means that your business is locked in, and you can’t pivot your strategy or purchase additional items for a long time. In the current market environment, conditions can change rapidly, so an inability to pivot can be a big problem because it makes your business inflexible.

When leasing, it’s much easier to adjust your strategy when the needs of your customers change. While the average lease lasts three to five years, you can get a shorter duration of just 12-24 months. At the end of your term, you can either keep the equipment, return it, or exchange it for something else. That way, you have full control over what direction you take your business.

You Don’t Need to Fundraise 

If you’ve ever set up a new company, you know how difficult it is to raise enough money to pay for all the expenses. You have to rent a space, hire employees, buy furniture, buy your industry-specific tools, and pay for ads and marketing materials. These costs can quickly add up to a six or seven-figure amount, and in many cases, it’s almost impossible to raise the necessary funds in a reasonable timeframe.

Leasing is a great alternative because it allows you to reduce your initial investment in your company. Some kinds of contracts allow you to delay payments for several months, so you can build up your customer base and start to generate revenue before you have to worry about your lease. As long as you are financially stable and have a solid business plan, you shouldn’t have any trouble finding a leasing company to work with.

You Can Get the Best Equipment Possible 

When purchasing new things for your business, it’s important not to go for the cheapest kind of equipment for several reasons. Firstly, you might save money by buying excellent items, since they often last longer. Secondly, the quality of your products or services will improve if you work with good tools and machines. Finally, it might be easier for you and your employees to work with equipment that is intuitive and up-to-date.

However, buying the best tools can be very difficult for small and medium-sized businesses due to the high price of the items. Leasing is a good alternative because it allows you to access equipment from excellent brands without having to spend the money upfront. Thus, you can benefit from great quality, but you’re not putting your company’s finances at risk.

Budgeting Is Easier 

Many business owners are excellent at what they do, but they struggle to handle the financials of their company. If you find it hard to budget and plan for your firm’s expenses, equipment leasing could be a good option because the payments don’t change for the duration of the lease. This means that you won’t have to worry about large one-off expenses, and you won’t have to save money every month to buy equipment upfront at a later date.

When you sign up for your lease, you should speak to your account manager about the terms and conditions. Often, maintenance and repairs are included in the contract, so you won’t have to deal with the upkeep of your equipment. This can take even more pressure off your business’s finances, and it minimizes the risk of your tool or machine breaking down and causing unexpected costs.

You Get a Personalized Deal

Leasing companies understand that each business is unique and has its own requirements. For this reason, there are a wide variety of options. If you run a seasonal business, you can get a lease that is more expensive during the peak months and cheaper during the less busy months. New companies can delay payments, so they have a chance to build up their sales without having to worry about spending money on their equipment.

If you’re sure that you want to purchase your tool or machine at the end of the lease term, you can sign a capital lease, also called a $1-buy-out lease. This allows you to buy the item for $1 once the lease is over. On the other hand, you can choose a more flexible contract if you want to leave your options open. Your account manager can help you consider all the options and choose the one that is most suitable.

How to Get Started 

Now you know why leasing business equipment can be a good idea, you might wonder how you can get started with a company like Noreast Capital. Business owners who already know what they need can get in touch and apply for their lease directly. Alternatively, you can open a line of credit weeks or months before you need your lease, so everything is set up ahead of time. When you contact us, you should hear back within a few hours or days.

Qualifying for a Lease 

Most small and medium-sized businesses can qualify for a lease, especially if they have been operating for more than two years. You might have to show your account manager your financial statements, trade references, or bank references. Newer companies will qualify if the business owner is financially stable and able to offer a personal guarantee. Some of the documents that are required for startups include the business plan and supplier contracts.

Finding the Right Option 

As discussed, there are many options, and your account manager will speak to you about the leases that could suit your business. If you’re still building up your customer base, you might opt for step payments, which gradually increase over time. You can also choose whether you would like to pay monthly, quarterly, or annually, and you can select the best lease duration. Most commonly, our terms are between 12 and 60 months.

What Happens at the End? 

When you sign up, you can discuss what happens at the end of your lease term with your account manager. Usually, there are three options: you can end the lease and give back the equipment, return the tools and lease different ones, or buy the equipment. If you already know what you want to do, you can sign a specific kind of contract like a $1-buy-out lease, but if not, you can leave your options open.

Whether you’re just starting out or you’ve been running your small or medium-sized business for many years, you should look into office equipment leasing companies the next time you need to purchase big-ticket items. When you work with a leasing company, you can save your capital, remain more flexible, avoid fundraising, get better pieces of equipment, and budget more easily. Contact us at Noreast Capital to find out more about the personalized, low-cost leases we offer.