Leasing equipment is an important part of starting a successful business. Equipment leasing allows a business to retain working capital by avoiding large initial expenditures. To avoid these large, upfront costs, some new businesses try to finance their equipment using bank lending or other strategies that can limit their business growth. You can lease your equipment and make gradual payments. The equipment is then generating revenue that can be partially used to pay the lease so that the equipment is essentially paying for itself. Help your business thrive by avoiding common equipment financing mistakes so that you don’t end up in a contract that doesn’t suit your needs or one where you are paying too much. Here are some common pitfalls to avoid so that you can find the best equipment leasing partner and get the most out of your equipment leasing contract.
7 Leasing Mistakes
1. Using Large Amounts Of Available Cash On Equipment
When a company purchases its equipment outright or tries to make large payments on the lease, it limits the amount of liquid capital available for other aspects of the business. Even if you have enough working capital for everyday expenses like payroll, it can limit the amount of cash available for unexpected expenses.
2. Using Bank Lending
Banks can recall their line of credit at any time, which can leave your company vulnerable. It is also common for banks to reject lending requests of new or small businesses that have yet to generate revenue and therefore appear high-risk. Businesses that do get approved for a bank loan can have other conditions that can influence future borrowing.
3. Applying To Multiple Leasing Companies
You may be trying to shop around for the best deals, but applying to multiple leasing companies can be a red flag for the leasing companies, as it shows a lack of commitment. When lenders see a business applying multiple leasing applications within a short time it can indicate indecisiveness or lack of fiscal responsibility.
4. Using Equipment Vendor In-House Leasing Programs
The in-house leasing programs offered by equipment vendors often do not always offer the best leasing rates. The equipment vendor may use third-party lenders for leasing programs and these often have higher premiums. By working directly with a leasing partner directly, you can avoid these higher costs.
5. Leasing The Wrong Equipment
Equipment leasing gives you the opportunity to lease high-end equipment that you may not have access to if you were to purchase outright. Research the equipment you are considering, read reviews, and pick something that will be reliable and suitable for your business based on the available features. Make sure you aren’t choosing lower-quality equipment just because it seems like a deal. Equipment leasing gives you more freedom with your equipment budget so you can choose the equipment that will serve your business best.
6. Not Choosing A Leasing Partner That Suits Your Needs
Different leasing companies will have their strengths and weaknesses and some may specialize in certain fields. Look into how many years of experience a leasing company has, but also ensure they have experience leasing equipment for your type of business. If you have questions about a leasing company that you are considering, don’t hesitate to reach out and ask.
7. Choosing A Leasing Partner That Is Impersonal
Beyond doing research on what type of leasing a company specializes in and how experienced they are, you should also consider their customer service. Your leasing partner is just that: a partner. And they should treat you as such. Your equipment leasing partner should not only help you finance your equipment, they should care about the success of your business and desire to see you thrive instead of focusing only on your payments. Leasing partners who offer different payment plans and flexible financing options are always best to work with and passionate staff will help your business thrive. You should feel satisfied with your equipment leasing partnership.
Avoid Equipment Leasing Mistakes With The Right Leasing Partner
To avoid any and all of these pitfalls, partner with First Capital Leasing for all of your equipment leasing needs. With over 85 years of combined experience, our staff is committed to helping you fulfill your equipment needs now and in the future as your company grows. Our dedicated team works closely with our leasing partners to ensure we understand the needs of each business we work with and find ways to best structure a financial plan that will work for you, your business, and your budget. Our Calgary-based company offers fast and flexible leases and competitive rates coupled with exceptional service throughout Canada and we offer fully tailored leasing solutions. To partner with First Capital Leasing, either call 1-888-251-3644 or fill out the contact form.
Q: How do I apply?
A: We have an easy to navigate application process. Apply Here. And once you have applied, there is no need to apply again as we keep you on record and we will continue to partner with you for all your business financing needs.
Q: I already bought my equipment, but now I have little cash flow. Can you help?
A: First Capital Leasing Ltd. offers multiple sale-leaseback plans. You sell the equipment you own to us, and we lease it back to you at advantageous rates. This frees up significant working capital that can be invested in expanding your business.
Q: What Type of Equipment Can Be Financed?
A: First Capital Leasing offers the flexibility to finance any type of equipment that you require for your business. Some of the types of equipment we can lease include, but are not limited to:
- Fabrication and Machines
- Materials Handling
- Technology and Telecommunications
- Surveying Equipment
- Office Furniture
- Beauty and Aesthetic