Equipment financing is the process of obtaining business equipment using a funding or lease. Equipment financing funding allow you to purchase the equipment with payments made over time, similar to using an auto funding to buy a personal car. Equipment leasing, on the other hand, gets you the equipment you need without the intention of owning it. You’ll make a regular lease payment to continue using the equipment as if it were your own. When the lease is up, you can give the equipment back or renew the lease. Sometimes you may have options for purchasing the equipment at the end of the lease.

Equipment financing works by providing you with the equipment your business needs for a periodic payment which includes interest. After the set term of months for your funding or lease is over, you’ll either own your equipment outright or will need to make a decision about your lease. Generally, you can renew your lease if the equipment is in good condition and still helpful to your business. You can finance almost any type of major equipment your business needs to run smoothly, expand and maintain competitiveness.

Securing financing for business equipment might seem daunting. If you try to get a funding from a traditional lender like a bank or credit union, it can be. Depreciation on equipment usually makes traditional lenders wary of lending large sums for businesses to purchase equipment.

However, alternative lenders usually provide customized financing solutions for your equipment needs. At Formula 1 Capital, we can help you design an equipment funding or lease program for business equipment up to $150,000. We don’t require a down payment and our equipment financing is available for new or pre-owned equipment.

You may be able to finance equipment for a short period of time or even as long as a decade plus. The specific length of your equipment financing term depends on several factors. If you’re purchasing expensive equipment with a funding, you may need to make payments for several years. On the other hand, if you’re leasing equipment with a fast depreciation, you may only want to lease it for a couple of years.

Many business owners find they can save money both on the cost of business equipment and taxes by financing equipment and taking the Section 179 deduction. Using the Section 179 deduction in combination with equipment financing can have added value. If your equipment qualifies, you could save money now on your taxes by deducting up to 100% of your equipment cost. You’ll also be protecting your cash reserves by making periodic payments for the equipment instead of purchasing outright. Depending on the equipment, combining financing with the Section 179 deduction could greatly help your bottom line.

Financing your heavy equipment is a great way to make expensive machinery and tools more affordable for your business. You can finance heavy equipment by using a purchasing funding or equipment lease. To start the financing process, you’ll need to find a lender and apply for financing. You may have more difficulty getting equipment financed through banks or other traditional lenders. An alternative lender like Formula1 Capital offers higher approval rates and customized financing options tailored to your business needs.