Financing is a tool that any company could and should take advantage of regardless of their status or prior successes/failures.
A now successful business owner approached me years ago with challenged credit, working day and night for a paycheck to feed his family. He had dreams of working for himself to provide a better future for his kids. After advising him on what it would take to get approved for equipment financing, he was able to save up cash for a down payment to get his first truck on the road.
He made his payments each month and was able to keep the profits he earned. Thus, conserving cash for his personal needs and future business growth. Having established strong pay history and business credit, he was able to add another truck to his fleet within the first year! Now his profits have doubled, his business credit is getting stronger, and he’s able to cultivate savings for his business/family.
1. Separate Business Credit from Personal Credit
Using your personal credit to pay for your business sounds easy but could stunt your personal growth. Do you have goals of purchasing a house, a car, or sending your kids to college? You don’t need to compromise your personal growth to expand your business. Instead, separate your personal and business expenses.
Successful business owners establish lines of credit to increase their purchasing power. Plus, equipment financing transactions are a contract with the business and the lender. This reduces personal risk while helping your business acquire equipment to generate revenue.
To learn more about the risks of using personal credit, read “Risks of Using Your Personal Credit for Your Business [Why to Keep Business Credit and Personal Credit Separate?].”
2. Build a Strong Business Pay History
Very few small businesses can grow and expand their operations consistently over time with cash alone. According to the National Small Business Administration, nearly 27% of businesses claimed they couldn’t receive the funding they needed, preventing them from growing.
When you establish business credit, you show lenders how well your business pays back what you borrow. Making payments on time helps establish credibility, resulting in favorable terms in future transactions. The stronger your business credit, the easier it will be for your business to apply for larger lines of credit, lower interest rates, and more competitive programs.
To learn how to establish business credit, read “Establishing & Understanding the Importance of Business Credit.”
3. Use Equipment Financing to Conserve Cash
Without cash, profits become insignificant. Cash funds your payroll, covers your overheads, pays bills, and other critical business functions. Without a healthy cash flow, your business may not survive.
Successful business owners use equipment financing to reduce equipment expenses and ensure their business has more cash going in than out. It’s an ideal option for both companies that don't have the cash outright to buy equipment outright or are looking to conserve cash for other business needs. Plus, financing equipment allows your business to keep more significant reserves, stay nimble, invest elsewhere, and grow faster.
See why cash flow is important for your business and how equipment financing can help in the “Take Control of Your Business' Cash” infographic.
4. Leverage Equipment Leasing and Financing Tax Benefits
When your business depends on equipment to generate revenue purchasing new assets will always be a necessary expense. However, a way to put more money back in your pocket is to leverage tax savings.
Successful business owners often choose to finance equipment because the purchase qualifies for a Section 179 tax deduction. What is that, you ask? Section 179 allows you to accelerate your tax benefits by writing off 100% of the purchase price the tax year you acquire it. Instead of waiting to enjoy the benefit over many years, your business can use this considerable deduction to offset your income taxes in year one.
To learn more about the benefits and tax savings available to you, visit www.beaconfunding.com/taxsavings.
5. Have Access to Cash with an Equipment Sale-leaseback
One of the advantages of a sale-leaseback is it enables you to get cash from the equipment you already own. When done strategically, you can use the cash flow to grow your business and increase your revenue potential. The best part? The equipment remains in your possession throughout the lease. Keep using your equipment to generate revenue and use the cash to accelerate your business.
Here’s how successful business owners are using sale-leaseback proceeds to amplify their business:
- Offer a new service
- Hire more team members
- Expand to a new location
- Support business’ working capital
This resource breaks down how a sale-leaseback works and how to get started. Check it out here.
Apply These 5 Habits to Your Business
From helping start-ups get off the ground to consulting well-established businesses looking for ways to expand and save more money, we always have options for you to get a leg up on the competition and turn your dreams into a reality.
Schedule a call with me today and get fast answers about equipment financing today.