Industrial Equipment Leasing

Written by Steve Thompson

The term "industrial equipment" can have many meanings, but it usually boils down to two words: big and expensive. Unless a business has sufficient liquid capital to finance every piece of machinery it needs, it must look toward other options, such as industrial equipment leasing. This leaves cash available for other business expenses, but allows the company to operate at its full potential.

An industrial equipment lease, unlike other types of commercial leasing, is usually handled through a financial institution, such as a lending firm. These groups connect business owners with lessors that offer the right type of equipment at a reasonable cost.

Before investigating this type of lease agreement, it's important to determine if this is the right decision for your business.

What are your financial constraints?
If you have sufficient liquidity in your business to purchase industrial machinery, it's usually best to pay for it up front. This way, you don't have to provide financial records for your business and you won't pay more in interest and other lender fees. However, if your business is on a tight budget and you want to keep the majority of your cash available, industrial equipment leasing might be a favorable alternative.

Will you be able to deduct interest from your taxes?
Before you sign an industrial equipment lease, talk to your accountant about potential tax benefits of leasing. In many cases, you'll be able to deduct the interest or even part of your leasing payments from taxes during the years that you lease. There may be other tax-deductible expenses that you should consider, as well, so make sure you have all of the information up front.

Is training and maintenance included in industrial equipment leasing?
This is something that varies depending on your location and the specific leasing company you work with. Talk to a sales representative about everything that is included in your monthly payments. Will your employees be trained to use the equipment? Will they perform routine maintenance without additional fees? Upkeep is sometimes just as expensive as the upfront purchase of such equipment, so having that built in to your payments can be extremely beneficial.

How often does new equipment emerge?
Another benefit to industrial equipment leasing is the ability to obtain new machinery without having to additionally spend thousands of dollars. In many industries, new equipment emerges on the market every year, making everything that came before it obsolete. This can result in needless expense for business owners, so consider the overall turnaround of manufacturing.

In many cases, industrial equipment leasing can free-up necessary capital for other ventures while still providing your business with the machinery it needs to operate. Just make sure to look over the contracts very carefully before signing. Also, don't hesitate to seek the counsel of an accountant before you make the decision.

When you're ready to lease equipment, BuyerZone can help you find the right companies to work with. Submit a free request for Equipment Leasing quotes, and get matched to multiple lease providers in your area.