Most businesses with more than one or two employees need software to complete routine tasks such as scheduling meetings, storing customer data, and automating advertising campaigns. In some cases, industry-specific programs are also required. But software can be expensive when you buy it upfront. For this reason, countless companies have selected financing to purchase software.
Getting a loan or a lease is a good idea for anyone who would like to keep their capital intact, regularly gain access to new products, or keep their options open. While you can often finance your purchase directly from the software company, going through a large lending company can be better because you can access a more diverse range of products.
What Companies Offer Credit Financing to Purchase Software?
There are several ways to finance a software purchase. If you already know which program you want and you believe that your needs won’t change in the future, you can speak directly to the company that manufactures the program. However, most businesses would benefit from selecting a large software leasing company that offers software from multiple vendors.
Businesses like Noreast Capital can issue leases or loans to people all over the country. Thus, you can get financing for multiple locations, and you can take your equipment with you when you move to a new office. What’s more, we work with various vendors, so you can get more than one type of software, or you can switch when your current product no longer matches your needs.
Why Choose a Large Leasing Company?
A large leasing company is more flexible and easier to deal with. Once you have a lease line of credit, you can borrow various kinds of software and equipment, and you can switch from one software to another if your company’s requirements change. Normally, the lease terms are between 12 and 60 months, but if that doesn’t work for you, you can select a different term.
In contrast, smaller companies often have a more limited range of products and options, so they might not fit your needs in the long term. Similarly, getting financing directly from software companies can be a hassle because you’ll need to fill in a new application every time you want to purchase from a different manufacturer, and you’ll have to manage all your leases separately. In a big company, your account manager deals with the individual vendors for you.
Software Finance vs Lease Agreement
There are two ways of financing a large purchase. The first option is to get a loan, which means that you borrow the money and pay back the lender over several months or years. You own the software or piece of equipment right away, and once you’ve paid it off, it’s yours to keep. This option is suitable for people who know that they want the software for the long term but don’t want to spend the money upfront.
The second option is a lease. When you lease equipment, you borrow it from the lender, but they retain ownership. There is usually a fixed term, which might be one or several years. During this time, you can use the software, and you get support from your lender if there is a problem. Once the term is up, you can either pay the remaining amount and keep the equipment, return it to the lender, or exchange it for something else.
Why Finance Software?
Nearly eight in ten American companies borrow or lease some of their equipment. So, why is this model so popular, and why do firms prefer getting a loan or lease over purchasing tools and software outright? The answer is that buying everything with cash is expensive, and it depletes a company’s financial resources. This slows down growth and makes it harder for businesses to remain profitable.
Additionally, the changing market environment has required businesses in many industries to adapt their services over the last few years. This is much easier when equipment and software can be returned or exchanged. When it comes to software, the available products and their uses change frequently, so it’s best to remain flexible and reevaluate whether your current setup is still working every few months or years.
You Stay Up-to-Date
Every year, new software companies are founded, and they produce innovative products that serve various industries. If you buy a program outright, you might pay thousands of dollars. For this investment to pay off, you have to use software for several years, and sometimes even for a decade. But during this time, newer and better options might have been developed. This means that you’re falling behind and no longer using technology optimally.
Here at Noreast, you can get short-term software leases that only last for 12-18 months. Once the term is up, you can study the market to figure out whether your current program is still the best in your industry. If not, you can let us know that you would like to switch to different software. That way, you’ll never miss out on new developments, and you can build up a reputation as an innovative company.
You Can Pivot
During the pandemic, businesses in almost every industry had to pivot and offer new services. For example, restaurants and cafes had to focus on takeaways or deliveries instead of allowing customers to consume food and drink onsite. Similarly, shops had to make sure their customers could buy items online, and educational institutions had to switch to online lessons.
Pivoting to adapt to new market conditions is much easier when you have a flexible loan or lease. Instead of having to sell the items you’ve bought and purchase new ones, you can simply speak to your lender and ask them for different software and equipment. While you will have to wait for the end of your term to give back leased equipment, you might be able to upgrade or borrow more at any time, depending on your situation and the terms of the lease.
You Can Keep Your Capital for Other Expenses
Setting up and running a business is expensive. In addition to purchasing software, you might need to rent an office or shop, pay for your staff, buy inventory and raw materials, and advertise your services. The expenses can quickly add up. If you want to conserve as much capital as possible, so you have some reserves should something go wrong, borrowing equipment is a great option.
Instead of spending all your money upfront, you’ll pay a small monthly amount. This makes it easy for you to budget months or even years in advance, since your payment is usually fixed for the duration of your loan or lease.
There Are Solutions for All Kinds of Companies
Not every business has the same needs. While a large company might be able to absorb the cost of software, a smaller company will struggle to pay for everything right away. Therefore, large lenders like Noreast Capital have come up with a wide range of leases that suit various businesses. When you sign up with us, you can choose a capital lease, which allows you to purchase the equipment at the end of the term.
Alternatively, there are more flexible leases for people who don’t yet know whether they would like to keep or give back their products. If you’re a startup and you don’t yet have any cash reserves, you might be able to delay your payments, especially if the company’s owner has a strong financial background. Seasonal businesses can pay more during the busy season and less during the slow months.
You Have Options at the End of the Term
When leasing software, it’s often best to select a shorter term. Your company’s needs might change in the next year or two, or a superior product could be developed. Because it’s hard to tell whether you’ll still need the same kind of software once your term is up, consider getting a flexible lease. If you like the software you’ve chosen, you can simply renew your contract with Noreast Capital. If not, you can give back the product and borrow something else.
What Kind of Software Can I Lease?
Almost all kinds of software can be leased. You shouldn’t have any trouble finding general programs that help you with accounting, customer relationship management, advertising, scheduling, and supply chain management. Additionally, there might be specific software available for your industry, such as graphic design programs or software specific to architects.
The best way to find out whether you can gain access to what you need is to reach out to an equipment lender and speak to them directly. Your account manager can help you find suitable software and, if necessary, other types of equipment.
Many businesses now choose to finance software instead of buying products outright. Getting a lease or a loan allows you to remain flexible and up to date. What’s more, you can keep your capital or invest it in the expansion of your business. Get in touch with us at Noreast Capital to find out more about the kinds of software we can offer on finance and to get your lease line of credit.