Are you looking to grow your business?
But the upfront costs for equipment are just out of reach?
Equipment leasing is a great finance solution to support and enable businesses to scale up quickly.
Below is your complete guide to the Pro’s and Con’s of equipment leasing and why it may or may not be the best fit for your growth plans.
Need more information? Talk to a GRENKE Account Manager today!
The Pros and Cons of Equipment Leasing
What is equipment leasing and how does equipment leasing work?
Business equipment leasing is where the lender buys equipment (machinery, technology, etc) and leases or rents it to a business. A financial institution or leasing company retains ownership of the equipment, while the business has the use of it. This avoids the need to invest capital in equipment.
What are the pros of equipment leasing?
- Less upfront cost
This is a very attractive benefit allowing a business to spread out the cost of a purchase. Regular payments (usually monthly) are due to the leasing company, so there is no large initial cost.
- A higher standard of equipment
Businesses get access to higher standard equipment which may have been too expensive for them to buy outright
- Easy to upgrade
It is much easier to upgrade to a better or newer model when equipment is leased. Old, out-of-date equipment can easily be changed for a new model without the bother of having to sell it. It’s important to structure the lease agreement carefully with a relatively short term to ensure you can upgrade easily and regularly.
- A flexible arrangement
A business can confidently lease a piece of equipment even if they aren’t sure they will need it in the long term. Using other types of equipment financing or by purchasing outright, can be much more difficult to do.
- Easier for cashflow
As the monthly payments are smaller than outright purchases and are regular, it makes planning cash flow easier to do.
- No repair/maintenance costs
In many lease agreements, both repair and maintenance are included in the regular payment.
What are the cons of equipment leasing?
- Interest Costs
Even though equipment leasing isn’t the same as an equipment loan, there will still be interest payments which can be at relatively high rates.
- The equipment isn’t yours
There are benefits to owning equipment but if you lease it, those benefits may not be available to your business. Additionally, when leasing, the value of the asset isn’t in your books.
- Getting locked into arrangements
It can be difficult to terminate inflexible medium or long-term agreements. It’s important to structure a lease agreement carefully.
- Difficult for new businesses
It may be difficult for newly set up businesses to lease equipment. Larger upfront payments or other concessions may be demanded. This can be true even if the business owner has an excellent credit history and financial track record.
Are you considering equipment leasing in Ireland? GRENKE offers a range of options cashflow solutions for business of all sizes, types, and stages.
Talk to GRENKE Today!
GRENKE is a leading financial provider in the Irish market and at the cutting edge of finance. As one of the leading financial providers in the Irish market, GRENKE’s slogan is ‘Fast, Forward, Finance’. GRENKE offers entrepreneurs fast and flexible financial solutions through a range of services including leasing and invoice financing. We match the perfect financial solution to your unique business needs.
Over the last 40 years, GRENKE has provided leasing to numerous styles of businesses and organisations. This includes sole traders, partnerships, public and private limited companies, associations and organizations, medical, health, and educational providers, municipalities, public hospitals, semi-state institutions, Government bodies and so much more.
Our expertise and strong market position are no coincidence. If you are a business owner looking for advise on fast and flexible financing, talk to us today!