This video was made by Daniel Nubie, a Business Development Consultant at Beacon Funding. As a consultant, Daniel works with business owners to help them grow their operations using equipment financing options tailored to their situation.
If your goal is to own equipment, but have lower out-of-pocket expenses throughout your lease-agreement, then Lease-to-Own is for you. Since 1990, we’ve helped over 20,000 businesses acquire revenue-generating equipment through affordable leasing and financing options.
The following is an interview with one of our equipment financing experts, Daniel Nubie, on how he helped one of his customers grow his business with a Lease-to-Own option.
In this article…
- What is Lease-to-Own?
- Benefits of Lease-to-Own
- Case Study of Lease-to-Own
- How Do You Qualify for Lease-to-Own?
What is Lease-to-Own?
Lease-to-own is a financing product that allows you to get the most value from your lease. It’s similar to traditional financing but has equipment ownership in mind.
This product allows you to continue producing revenue when your lease payments are done. You can continue to use your equipment for as long as you need, allowing you to continue earning incremental revenue on a monthly basis.
Your business not only takes advantage of an asset that pays for itself, you retain its wholesale value when your agreement ends. At the conclusion of your lease, we transfer ownership to you.
Owning the equipment outright is a huge benefit if you want to trade in for a newer model or upgrade to a larger, more multi-functional asset. This allows your business to perform additional functions, such as having equipment with equity to help mitigate future cost of funds.
Benefits of Lease-to-Own
We know your equipment has a useful life of more than just a few years, so why wouldn't you want to own it? Apart from simple and hassle-free financing, businesses who used a Lease-to-Own option can also take advantage of these 5 benefits.
#1: Mitigate Risk While Turning a Profit
Having a low fixed monthly payment that fits into your budget is a simple yet powerful key to success.
Unlike your personal car or home, your commercial equipment generates a profit long after the loan is paid for and pays for itself. With that fixed payment, it is almost like having an employee on payroll rather than just another expense.
#2: Maintain Liquidity
Most businesses fail by not having enough cash on hand. Rather than being equipment rich, leasing helps your business stay healthy by keeping cash in your hands.
Why is keeping enough cash in your business important? You can use it to pay for ongoing operating expenses and invest in other areas crucial to running a successful operation.
You can’t finance things like marketing and payroll (which will help drive revenue), but you can finance expensive purchases like equipment. By leasing equipment, you can start earning a profit with the equipment rather than miss all that revenue potential while you wait to save enough cash for the purchase.
#3: Offset Upfront and Monthly Costs
If Beacon Funding structures a lease with a 10 % purchase option, a lot of times people assume 10% is in addition to what they are already paying. In reality, their purchase option is lowering the monthly payment and the total amount due upfront.
Without a 10% purchase option, both their monthly payment and total amount due would be a little higher as you end up paying the same amount in the long run.
#4: Gain Ownership
When I first talk to customers about using Lease-to-Own, they’re hesitant. Why? Because they’d rather buy and own the equipment from the beginning.
However, this product is designed with ownership in mind and isn’t really different than any other financing product. The end goal is always for the customer to own the equipment through low manageable monthly payments.
#5: Tax Benefits
Leasing allows you to write-off most or all your monthly payments as a business expense when you file your taxes.
When you write-off your monthly payments, you can dramatically lower your business’s income tax bill and essentially keep more cash in your pocket. This can also make navigating the sales tax a lot easier.
Normally, when you make a large equipment purchase, you will have to pay sales tax at the time of purchase. With a lease, depending on where you live, sales tax is broken up and paid with each monthly payment.
Tax laws can vary state by state and county by county, so it is best to speak with your CPA about what would work best for you.
Case Study
For a lot of my customers, benefiting from the Lease-to-Own program and its tax write-offs has helped give them a head start in the new year.
For example, I had one customer get a brand-new tow truck in the fall with a lease. Leasing allowed him to save big when he filed his taxes the next spring. He then used his tax savings to finance two more brand new tow trucks the following April and May.
In a little less than nine months, my customer went from constantly breaking trucks to acquiring three dependable new ones. That allowed him to service a lot more customers, hire more drivers, and ultimately generate much more revenue.
How Do You Qualify for Lease-to-Own?
At Beacon Funding, we make it fast and easy to apply for leasing. Submit your application in under 5 minutes and you can get approved within 24-48 hours. The application process consists of:
- One-page business credit application.
- Last 3 months of your business bank statements.
- An invoice of the equipment you are purchasing.
Qualifying Criteria
We primarily look at personal credit, business credit, time in business, the business cash flow, and the actual asset itself. If you have more strengths in one area than another, we can take that into consideration.
This allows us to be super flexible and work with the widest range of customers, from well established businesses with years of borrowing history to startup businesses with a spottier credit history.
With thousands of happy customers and over $1 billion worth of equipment financed, you can rely on us to help scale your business and acquire revenue-generating equipment.
To see how we can help you, visit beaconfunding.com/talkwithus today.
This concludes Daniel Nubie’s interview on how he helped one of his customers grow his business with a Lease-to-Own option.