Construction Equipment Financing

In construction equipment financing, there are two routes to go. Lease or buy. You must consider these options if you are going to be able to plan for the future of your construction company. Both options have their own merits and drawbacks.

Business Loans Can Help Buy Needed Construction Equipment

Equipment used in the construction industry in most cases will not become obsolete during the life of the technology. Bulldozers, backhoes, and other digging equipment have essentially been the same for years. If maintain properly, construction equipment will last for years past what a lease would offer.

Also once the loan is paid off, the business owns the equipment. This is very valuable in the fact that your business gains collateral which builds accrued equity. This equity can be used later on down the road to help secure working capital if the need arises. However, we have found that unsecured lines of credit offered the small business person all the extra working capital they need, with requiring collateral. Futhermore, the equipment that is bought can be counted on taxes as depreciation.

The Benefits of a Leasing Construction Equipment

Tax benefits of a lease are the #1 reason for leasing to the average business owner. A “true lease” provides a 100% deduction according to the IRS. If you do not know what we mean by a true lease, the Internal Revenue Service uses the term true lease to define how a lease is structured.

When the lease is structured as a true lease, the end-user can claim the entire lease payment as a business expense. To qualify for this status, the equipment must be declared at fault fair market value at the leases end. While all this sounds complicated, it really isn’t. We do, however, recommend consulting with a professional tax consultant for more information on the ramifications of the tax benefits of leasing.

Leasing is great because you can often get the equipment that you need without any down payment. This is wonderful for businesses that do not have the extra cash. Lease payments are typically fixed for the term of the lease and give the business owner, a good idea what to budget.