March Sees Rise in Equipment Leasing
U.S. companies invested $6.8 billion in new loans and equipment leases during March, a total that is up 45 percent from the month before, according to the monthly results of an index kept by the Equipment Leasing and Finance Association (ELFA).
“The continued low interest rate environment promoted by the Federal Reserve, together with relatively benign fundamentals in the broader economy, bode well for businesses planning to expand and grow in the coming months and invest in capital equipment,” said William Sutton, CEO of ELFA.
The recent uptick in equipment leasing is good news for alternative lenders like National Funding, which provide small business loans, merchant cash advances, and leases on equipment to smaller businesses strapped with immediate financial challenges.
Equipment leasing allows companies access to goods without the brunt of the initial investment. Yet, while many business owners might be hesitant because they want to fully own their equipment, a major benefit of leasing is consistent turnaround. Given the length of the lease term, entrepreneurs can take advantage of “built-in upgrades” in agreements that allow them to replace aging equipment with the latest state-of-the-art electronics or machinery. Not to mention, the equipment leasing tax benefits from Section 179 of the tax code.
If vital equipment for the success of a business is needed right away, leases can be approved quicker and more readily by alternative lenders as opposed to traditional banks, especially for young businesses.