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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.

What Are the Advantages of Leasing Equipment for Your Business?

There are so many hidden advantages of leasing equipment for your business! It’s an especially excellent option for businesses that want to grow their company but don’t have the capital. In addition, it allows companies to make investments in the future without spending all of their money at once.

You can use leasing as a tool to help you achieve all your goals and dreams for the business, no matter what they are! Here are some of the most impactful ways that leasing can boost your business:

What Are the Advantages of Leasing Equipment for Your Business?

Lower Cost Up Front

Leasing typically offers upfront cost savings since you’re able to spread the cost of equipment over a specified term, and there are no down payments required. Fewer upfront costs result in additional cash flow when compared with traditional financing methods. In addition, when you choose to lease, your business doesn’t have to use up existing lines of credit or bump up credit limits.  

Many businesses are able to pay for their equipment using lease financing before they would have been able to purchase it outright with cash or other forms of credit. Lease your equipment to save money on business expenditures (bank lines) for day-to-day operations, growth, or unforeseen business costs.

Get Equipment Faster

Getting a bank loan to purchase equipment can take weeks before you get approval. But leasing from us is lightning fast! You need only use our online credit application tool to request financing, and you’ll receive a reply within four hours – sometimes as quickly as 30 minutes!

Our documentation turnaround time is similarly fast; we can email, fax, or courier the documents overnight. Often, we can have everything set up within 24 hours. And the sooner you get approved and signed, the sooner you can get the equipment you need to make your business grow and thrive.
 

Flexible Payment Terms

Leasing gives you the ability to make low monthly payments as well as options for buy-out or end-of-term purchases. Also, we can provide your business with excellent credit terms and flexible payment arrangements that allow you to get the low monthly lease payments you need.
 
You can easily spread the cost of the equipment out over an extended period of time, so you’re never spending more than you’re making. Furthermore, we offer a selection of unique leasing plans tailored to your business needs. Some examples include:

$1 Buyout

Choose this plan when you’re completely certain you will want to buy out the equipment at the end of the lease. When your term is up, you purchase the equipment for a dollar.

Seasonal Lease 

If you have a seasonal business that’s closed for certain months during the year, this is a great option for you. This way, you only make payments during the months you’re open for business.

Deferred Payment

If you need the extra time, we can accommodate you. With this plan, you only begin making lease payments 2-3 months after you obtain the equipment.

Fair Market Value

This is a fantastic, flexible option for businesses that want to keep their options open! At the end of the lease term, you can choose to extend the lease, return the equipment, or purchase it at its fair market value. We even offer financing options for the last choice.

Consistent Monthly Payments 

Leasing enables you to use only the equipment you need within a budget that works for you. Once you’ve agreed to the best leasing option for your business, you pay the same rate every month for the duration of your term. Even if there is a sudden increase in interest rates, your payment stays the same. Predictable monthly payments can be a lifesaver for your business!
 

Save at Tax Time

Lease financing may help your company save money in taxes. Often, lease payments are 100% deductible, as it’s considered an operations expense. For example, section 179 of the IRS Tax Code enables a business to subtract the total price of certain equipment the year that it is purchased.

Some equipment may not qualify, but even then, you might be able to claim a depreciation deduction. It all depends on the business and equipment, so always ensure you check with your tax advisor to determine which savings apply to you.

Less Risk

Buying equipment outright can be risky, even if you have the capital. Marketplaces can change overnight due to the fluctuations in the economy and other unpredictable factors. Just look at how the pandemic has affected businesses!

But leasing equipment means you don’t have to worry about losing your investment. And if anything goes wrong, you’re only responsible for the lease payments, not the depreciation of the equipment itself. Leasing offers 100% financing, meaning your business won’t be responsible for any of the capital upfront. If something goes awry during the lease term—like a natural disaster—you can usually return the equipment without penalty.

No Maintenance Costs 

Most leases include scheduled maintenance and regular inspections, reducing the amount of equipment downtime your company experiences. If something breaks from regular use, you don’t own it, so you don’t have to pay anything for someone to come and repair it. Likewise, you don’t have to waste valuable time and resources looking for a repair company or replacement material.
 

Stay Ahead of Your Competition

Perhaps one of the most significant advantages of leasing equipment is that you can affordably obtain all the latest, cutting-edge equipment that enables your business to run at peak efficiency. That means you can keep up with competitors and deliver exceptional customer service that keeps your clients coming back for more.

For example, installing the latest office telephone system that can accommodate a higher volume of calls means you can deliver on projects more quickly and efficiently than the competition. That kind of service gives you an edge, even if your competitors are a bigger company.

Escape Obsolete Equipment

If you work with technology or equipment that needs regular updating, leases work to your advantage – you’ll never be stuck with old equipment because you don’t own it! If your equipment becomes obsolete or no longer functions as it should, leasing gives you an easy way out to avoid costly repairs or replacement costs while keeping up with current technology. Leasing offers the flexibility to make confident, informed decisions on what updates are needed without the long-term commitment.

Improve Safety and Security 

Businesses that own their equipment will naturally try to get the most mileage possible before replacing it. But depending on outdated equipment can be detrimental to the business’s safety and security. For example, old computers can pose a security risk if not replaced or adequately maintained.

Similarly, old vehicles can break down at the worst possible time. Electrical equipment could break and cause a fire. But by leasing your equipment, you never run the risk of such problems because you’ll never need to hold onto old equipment in an attempt to save money.

Improve Your Finance Options

Leasing conserves your capital. Instead of being treated as long-term debt, lease payments are reflected as a business cost. That means less debt on your balance sheet, opening you up to better financing options that support your business. It also preserves your lines of credit so you can save that reserve for emergencies or other projects. That extra capital gives you a cushion to operate on.

Product and Leasing Expertise 

Another benefit to leasing the equipment is your leasing company has comprehensive expertise on the product you’re using. That means that we can not only hook you up with the best leasing solution for your business, but we will arm you with the optimal equipment and show you how to use it most effectively.

There’s no need to hire an in-house professional to set up the tools or train your staff. For example, if you’re renting network equipment, you would likely need to hire an IT person to set it up and maintain it. But when you’re leasing the equipment, we take care of that for you!

Flexibility for Your Business to Evolve

Because of the transient nature of leasing, you have the freedom to plan and change your equipment needs as your business grows. For example, if you’re planning an expansion but don’t know how big a company you’ll be in five years, leasing can help protect your cash flow while still facilitating growth. Then when business is booming, and you need to scale your equipment needs, leasing easily allows you to upgrade your assets.

The numerous advantages of leasing equipment make it a no-brainer for many businesses. And with so many flexible lease options at your disposal, you can get the gear you need on just about any budget or timeline.

Whether you’re looking for short-term leases for office equipment or long-term leases for restaurant products, there’s something for everyone! So if you’re ready to get the products you need to accelerate your business to new heights, contact us at Noreast Capital today!