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Is It Difficult for a Small Business to Get an Equipment Lease?

When starting or expanding your business, you will need equipment such as furniture, electronic devices, and software. You can either choose to buy them outright or to borrow them using a lease or loan. The latter option is often preferable, especially for small businesses that might not have the resources to buy all the top-notch tools they need. An equipment lease allows you to conserve your capital while remaining flexible at the same time.

But how hard is it for a small business to receive such a lease? Will it be prohibitively expensive? The answer is that several factors affect your eligibility, and they include the age of your business, your financial stability, and the size of the lease you are asking for. Today, we will have a closer look at how we evaluate businesses and what you can do to increase your chances of a positive outcome.

How Hard Is Getting an Equipment Lease? 

It’s not always easy for a small business to get started. If you have a physical location, you will need to pay for staff, rent, furniture, and professional equipment. Having to pay for everything upfront might make it almost impossible for you to open a new branch. However, this isn’t usually the case. Lenders such as Noreast Capital allow you to lease your equipment so you can spread out the cost and allow your business to grow before you pay.

When considering you for a lease, we will take several factors into consideration. Depending on your company’s age and the profit you are making, we might offer you a lease line of credit. When you’re ready to borrow your first piece of equipment, you won’t have to apply again, and we will simply be able to provide it. Your personal account manager can let you know how much you may be able to borrow.

The Age of Your Business 

A crucial factor is how long you have been in operation. Most lenders prefer companies that have been running for at least two years because they have had time to become established and make a profit. Such businesses have records of their sales and expenses, which allows creditors to see whether they are making a profit and how much they will be able to pay.

However, just because you’re a new business doesn’t mean you won’t be eligible. There is a chance that you can borrow from us even if you are just getting started. To make a decision, we will look at the financial background of the owners. You will almost certainly have to back your lease with a personal guarantee in such a case, and we might ask you for additional documentation like your business plan or your supplier contracts.

The Financial Health of Your Business 

Every high-quality lender will do their due diligence before issuing a small business with a lease. When you apply to Noreast Capital, we will require you to provide certain financial documents. They include bank statements, trade references, or financial statements. To make the process easier, you should have all your paperwork in place before you contact us.

Once you have provided us with the necessary documentation, the equipment lease application process is surprisingly straightforward. Depending on the size of your lease, you might receive an answer within a few hours or a few business days. You can then select the tools that best fit your needs and either pick them up or have them delivered to your location.

The Size of the Lease 

Before providing you with a lease, we will check that you are able to handle the amount you applied for. Smaller and newer businesses should get started with a minimal amount so that they don’t run into problems later on. As your company grows, you can then increase the size of your debt to help you expand faster.

In general, amounts under $50,000 are reasonably easy to receive. If you are an established firm, you won’t even have to provide us with financial statements, and the application is a simple one-page form. Any amount over this threshold will be checked more closely since your monthly payments could be substantial.

Ways to Ensure Eligibility 

As you can see, getting a lease for your business isn’t extremely difficult, but lenders do check that you have a sound financial background. The process is easiest for businesses that are over two years old and are able to demonstrate solid and steady performance. If you don’t fall into this group, there are several ways you can ensure eligibility.

For example, you can back your lease with a personal guarantee, which means that you will be liable if your business can’t pay. Alternatively, a guarantor with a stable background could help. Your account manager might ask you to provide documentation such as your business plan, resumes from the company’s founders, and pro forma financial statements, which can prove that you are experienced in your field and on track to make a profit.

Why Leasing Could Be a Great Strategy for You 

Getting a lease is possible for most businesses, but it will take some time and effort. Is it worth the hassle? In most cases, the answer is yes. Not only can you conserve your precious capital, but you can also remain flexible and adapt to changing market conditions more quickly. The type of lease you get can be tailored to your company’s needs, and you can choose from a wide variety of equipment, no matter what industry you operate in.

Conserve Your Capital 

Arguably the most important reason why you should lease your tools is that this allows you to conserve your money. If you are a new business, you might not have the option to buy everything you need, so leasing is the way for you to start out with high-quality equipment. For more established businesses, it is a way to grow faster and reinvest your capital to expand the company.

When opening a new branch, you might have to pay for additional employees as well as rent. This can be enough of a financial burden, and leasing the furniture and equipment can take some of the pressure off. That way, you might be able to expand faster and therefore make more of a profit in the long run.

Retain Flexibility

Another key benefit of an equipment lease is that you don’t have to lock yourself into an expensive deal. Our terms are often between 12 and 36 months, and at the end of the lease, you can choose to keep the tool, give it back, or take out another lease. If your needs have changed or the market is different, you can simply choose something else.

This is particularly important when it comes to equipment that is time-sensitive, such as electronic tools and software. These items need to be updated frequently, but they can also be extremely expensive. By getting a lease, you can stay on top of current trends and upgrade much more frequently, since you didn’t spend all the money upfront.

Choose a Plan that Suits You 

Every company is different, which is why we at Noreast Capital offer such a wide range of leases to suit various needs. If you already know that you would like to buy the equipment at the end, you can go for a capital lease, which allows you to purchase the objects at a minimal price, such as $1, once your lease is up. If not, you can opt for a contract that offers you multiple possibilities at the end, such as giving back your equipment or upgrading.

Brand-new business might benefit from a special contract that doesn’t require payment for the first few months. You will be able to build up a clientele before having to worry about paying for your equipment. Similarly, seasonal businesses can pay less during the quiet months and more when they are busiest to prevent cashflow problems.

Choose from a Wide Variety of Products 

In terms of the equipment you can lease, there is an enormous variety available. In addition to furniture, you can also choose from a wide range of industry-specific tools and electronic gadgets. In fact, we even offer software for accounting, client interaction, graphic design, and more. No matter what you need, you should speak to our customer service team, who can present you with all the options.

Getting an equipment lease can be a challenge for small businesses, but it is not impossible. As long as you have a good financial history, have been in business for a few years, or are willing to personally guarantee the lease, you should be able to borrow all the equipment you need. The best way to find out more is to get in touch with a lending company and explain your situation.

You will be allocated an account manager, who can take you through the application process and help you increase your chances of getting a great deal. They might speak to you about the kinds of financial documents you need to provide and how much equipment you can expect to borrow. Call us today at Noreast Capital to find out more and open your lease line of credit.

How Does Equipment Leasing Work?

Running a small or medium-sized business can be hard work, particularly if it involves renting a physical location and purchasing a lot of expensive equipment. For this reason, the vast majority of U.S. companies use equipment leasing in a part or all of their operations. Not only can this kind of agreement free up cash and spread out the cost, but it can also be personalized to a business’s particular needs.

There are many types of leases that cater to the needs of various businesses. While most will use a standard lease plan, some startups or seasonal companies might benefit from specialized plans that take their individual situation into account. With a simple application process and flexible plans, Noreast Capital can help vendors to set up great plans for their customers. Let’s have a look at the leasing process and how it could help you grow your business.

What Is Equipment Leasing?

Sometimes, it doesn’t make sense for people to purchase a piece of equipment up front. For example, if it is very expensive, they have to furnish an entire business at once, or they only need the equipment for a short time, it might not make sense to buy equipment outright. In such a case, they can borrow it from a vendor instead.

In its simplest form, the setup is a rental service, where the lessee agrees to pay the lessor a certain amount of money for the use of the equipment. Payments are usually periodical, and in most cases, the lessee will have to pay a fee once a month. Once the lease agreement ends, it can either be extended, the piece of equipment can be given back or bought, or the lessee can decide to upgrade to a newer version and sign another lease.

Types of Leases

Just like other financial products, there are many options when it comes to choosing a lease. While some agreements will offer a lower monthly payment, others come with the right to buy the piece of equipment cheaply at the end of the plan. Depending on what a customer or business needs, they will opt for a different plan. Here at Noreast Capital, we provide a number of standard and specialized leasing plans that will suit different people and businesses.

Standard Lease Plans

There are various standard lease plans that can be offered to your customers. Those who are certain that they would like to buy the piece of equipment at the end of their lease will be well served with a $1.00 Buy-Out plan, which stipulates that they may purchase the goods for $1 once the agreement ends. People who opt for a Fair Market Value lease benefit from more flexibility and a lower monthly payment.

Once their lease is over, they can extend it, give back their equipment, or buy it at a fair market price. A 10% Purchase Option lease offers the customer the chance to buy the piece of equipment at 10% of its original value once the agreement ends, extend the lease, or terminate it. In most cases, the cheapest plan is the 10% Security Deposit lease, which requires customers to pay a deposit that will be returned to them once they give back the equipment.

Step, Deferred, or Seasonal Lease Plans 

Some businesses might have special requirements and benefit from an alternative option. For example, if a company is very new, they might not yet have the means to pay the full monthly fee, so a step lease plan can help. This allows them to pay a lower fee at first, which will then be increased as time goes by and their business starts to pick up.

Alternatively, a deferred lease plan can offer them the option to start payments only 60-90 days after the beginning of the lease. This is a great plan for brand-new businesses that might not have cash flow initially. A seasonal lease plan works well for businesses that operate at reduced capacity during certain seasons. They can pay more when their business is strong and then stop paying during the slow months.

How Can You Set Up Leasing for Your Customers?

The easiest way to set up leasing and attract more customers is to use a service such as Noreast Capital. By involving professionals, vendors can make sure that their leasing contracts are solid, they will be making a profit, and they are offering exactly what prospective customers are looking for. When a vendor gets in touch with us by filling out the online form, they’ll be approved within 2 hours, and our account managers will get in touch.

Our representative will ask about your product and who might want to lease it, then discuss with you what terms would be best suited to this kind of customer and how you can set up a leasing agreement. They might also speak about how you can get the word out, so customers know that you are now also offering leases. In fact, Noreast Capital serves businesses in all U.S. states, so you’re likely to find new customers through national exposure.

What Are the Benefits of Leasing? 

Now that you know what equipment leasing is and how it works, you might wonder why it’s worth it to both vendors and customers. Wouldn’t it be simpler for the vendor to sell a piece of equipment? And wouldn’t businesses save money by buying their goods upfront? Although leasing adds to the bill, the vast majority of U.S. businesses aren’t able to buy all of their equipment up front, so they opt for a lease instead.

By offering this option, vendors who sell goods to other businesses can cater to all kinds of firms, from small one-man operations that are just getting started to large businesses with hundreds of employees. An estimated 80-85% of companies lease at least some of their equipment, so the market is vast and the demand is there.

A Smaller Bill Upfront

Many businesses, especially those that are just getting started, don’t have large amounts of cash available to purchase their goods. For this reason, they are looking to use someone else’s equipment and pay a monthly fee instead. As mentioned, there are different plans to suit the needs of various companies, so a startup might benefit from a step lease plan and an established business might go for the 10% Security Deposit lease to lower their costs.

For vendors, leasing can be a great source of regular income. While an upfront payment is a simple, one-off transaction, a lease agreement goes on for many months, so the vendor can gain regular income. This can make budgeting easier. They will also make more money from the product they are selling since people who lease their equipment generally pay more in total. Both of these factors can make leasing a great business opportunity.

More Flexibility 

When setting up a business, flexibility and a healthy bank balance are key. Leasing allows business owners to spread out the cost of their new equipment over several months or even years, so they can hit the ground running. They will also have a lot of control over their budget because the monthly payments are likely to remain the same over time, which makes planning ahead and managing the company’s finances easier.

A Simple Application Process 

If you’re a vendor, you can easily apply to Noreast Capital using the online form. It should take you only minutes to fill out, and we’ll respond within two hours. You will be contacted by a customer service specialist, who will take you through the different options and tell you more about how to sign up.

Your customers looking for a lease will undergo a similarly easy process. We aim to keep our lease documents very simple and to two pages or less, so everyone can be confident in what you are signing.

Who Can Take Part?

No matter what type of business you’re in, leasing might be a great option to expand your operations. Almost everyone needs some kind of equipment, whether it’s physical or virtual such as a website. Our partners come from a wide variety of backgrounds that include the hospitality sector, medical fields, construction, and manufacturing. However, we also work with firms that lease electronic equipment, software, and even emergency vehicles.  

Equipment leasing is a great tool for businesses who want to cut down or spread out the initial cost of their equipment. It offers more flexibility than an upfront payment and allows business owners to keep their cash flow healthy. As a result, businesses can use their resources more efficiently and expand faster. For the vendor, leasing can be a stable source of income and a way to attract a very large customer base.

The easiest way to get started is to enlist the help of professionals, who will be able to advise you every step of the way. If you’re a vendor, your dedicated account manager will help you to determine the best leases for your type of equipment and get you set up with simple agreements that won’t confuse prospective customers. Call us at Noreast Capital to find out more and get started.