Most if not all businesses need some type of equipment. But construction companies need a lot of it—it is a critical aspect of their success. Indeed, building great structures relies on the skilled use of equipment. Leasing construction equipment can be an important way to acquire the use of that critical equipment.
Advantages of Leasing Construction Equipment
Leasing construction equipment offers these advantages versus buying the equipment:
It saves capital because the company doesn’t need to pay the cost of the equipment up front and the cost can be spread over time, thus helping match payments to company income. Further, the asset can be paid off over time, which helps in budgeting and managing funds.
The business can normally deduct the full cost of the lease from its taxable income.
The leasing company assumes the risks of equipment breakdowns.
Leasing construction equipment enables a company to have access to higher quality equipment that may not be affordable if purchased outright. Further, the lease provides flexibility when needing to replace or upgrade equipment.
Disadvantages of Leasing Construction Equipment
Financing construction equipment this way may be more complex to manage than an outright purchase. It may be more expensive over time than buying an asset. And the company may be locked into an agreement that has some timing requirements that are inflexible.
Advantages of Buying Construction Equipment
When a company buys instead of leasing construction equipment, the equipment is always available, and it can help build equity in the company.
The company is in total control of when the equipment will be sold or traded in.
Some of the equipment liabilities can be tax-deductible.
The disadvantages include turning liquid assets into fixed assets, the equipment can become obsolete, and the upfront payment can place a strain on cash flow.
Seek Expert Financing Assistance
Contact Capital Funding Source, based in Glenwood Springs, CO for customized funding solutions that will help your business grow beyond boundaries. We offer a wide variety of financing for small businesses.