If you own or operate a small business that relies on machinery, tooling, and related technology to satisfy the needs of your customer base, you’ll want to pay close attention to the machine tool financing and leasing options that are available today at National Funding. We’ve been helping thousands of customers across a variety of industries for over a decade, and our clients appreciate our rapid turnaround times and flexible financing terms when it comes time to finance or lease needed equipment. After all, many industries rely heavily on the performance of in-house machinery and tools to deliver top-quality end products throughout a range of business lines.
Get Started Today
Lease and Finance Options Available for Machine Tools
When it comes time to secure new or preowned machine tools, you generally have three choices when it comes to paying for the equipment. First, you can use working capital to purchase the machine tools. Some business owners like this option because it eliminates debt and provides total ownership of the equipment on day one. But, it also reduces the amount of on hand cash for the business, which can lead to a capital poor situation that may prohibit the business from spending money on other important expenses. As long as the business debt is the result of securing an asset like machine tools, this would generally be considered good debt.
A second option is machine tool financing. This refers to the lender providing the upfront cash necessary to purchase equipment, with corresponding loan terms that require periodic repayments until the principal amount is paid back. Similar to buying and financing a car, payments must be made until the principal amount is brought to zero and then the equipment is fully owned by the business. At that point, the business must decide what to do with the equipment – either keeping it or selling it. Often times, the equipment isn’t worth a whole lot by the end of the term, especially if it has been used hard throughout the entire span of the loan. But having the ability to make your own decision as to the future of the piece of equipment is quite empowering. You may find that the machine tool has become an integral part of your operation, and having it paid off and productively working may be priceless.
The third option is machine tool leasing – and this refers to a specific, structured lease that enables you, the business owner, to pay for the equipment through periodic repayments. Then, you’ll have to decide what to do with the equipment once the lease term is over. We offer several options when it comes to leasing, including purchase option, dollar buy-out leasing, and high cost equipment leasing. The purchase option is considered a traditional type of lease agreement and offers low monthly payments and three options at the end of the lease term. You can purchase the leased equipment at the fair market value at the time of the lease expiration, you can simply renew the equipment lease, or you can return the equipment. The last option is terrific if the value of the leased equipment has dropped significantly. A dollar buy-out lease enables you to purchase the machine tooling for $1 at the end of the lease term. You’ll have slightly higher payments than a purchase option lease, but you will be able to buy it out at the end of the term. The last option is the high cost equipment lease, and it is reserved for purchases of more than $100,000. Generally designed for commercial applications, we offer specific programs that are tailored to the unique requirements of larger businesses.
Using hard-earned cash to purchase equipment and tools makes little sense – especially when you are able to finance or lease equipment with such favorable terms. You’ll want to consult your tax advisor, but there are significant tax benefits to leasing equipment – like the Section 179 deduction. For more information on machine tool leasing or machine tool financing, contact us today!