How to Get Construction Equipment Financing
Thinking of getting construction equipment financing? If you look at it carefully, there are two options. You either lease or you buy the equipment outright with a loan. A construction equipment owner has to consider both options, both of which have benefits and drawbacks.
Construction Equipment Purchased With a Business Loan
Heavy construction equipment does not become obsolete during the life of the equipment. Construction equipment is very durable. With proper equipment maintenence, heavy duty construction equipment will last for years past what a lease would offer.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. However, we have found that unsecured lines of credit offered the small business person all the extra working capital they need, with requiring collateral. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
When the lease is structured as a true lease, the end-user can declare the entire lease payment as a business expense. For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the notion of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. This makes it much easier on businesses that are startups especially. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Plan Early for Your Construction Business
Whatever option you go for, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. Plan ahead, and you will do fine with your construction business!
Construction Equipment Purchased With a Business Loan
Heavy construction equipment does not become obsolete during the life of the equipment. Construction equipment is very durable. With proper equipment maintenence, heavy duty construction equipment will last for years past what a lease would offer.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. However, we have found that unsecured lines of credit offered the small business person all the extra working capital they need, with requiring collateral. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
When the lease is structured as a true lease, the end-user can declare the entire lease payment as a business expense. For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the notion of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. This makes it much easier on businesses that are startups especially. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Plan Early for Your Construction Business
Whatever option you go for, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. Plan ahead, and you will do fine with your construction business!
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Need financing for your construction business? Wall Street Capital Financing can help! Read more at Financing Construction Equipment.
posted by Credit Counseling at
6:01 AM
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