3 Tips for Startups Interested in Leasing Equipment
Regardless of industry, most businesses require various pieces of equipment to function. As a startup, you might not earn enough profit to afford the equipment to get your company off the ground. Startups sometimes find themselves in a dilemma where they need cash for equipment but also need the equipment to earn cash. Fortunately, equipment leasing is a possible solution.
- Determine if Leasing Is Right for You
Both startups and established businesses alike qualify for equipment leases. The equipment can include vehicles, kitchen equipment, medical devices and more, dependent on your industry. As a startup, you are less likely to have the necessary credit history to qualify for a traditional bank loan. Not to mention, bank loans can take months to receive, which continues to delay your ability to run your business effectively.
Equipment leasing allows you to receive the equipment right away. There is no downpayment and most companies provide flexible repayment terms. Instead of offering collateral, the equipment services as collateral. Keep in mind that when you decide to lease equipment, you should only lease equipment that will depreciate slowly.
- Prepare Your Paperwork
Once you determine that leasing is right for you, you must prepare the necessary documentation. Different leasing companies may have additional requirements for you, so paying attention to the documents they require is important. If you are missing documentation, it can slow the process down.
Most companies will ask you to provide a written lease proposal, financial statements and tax returns. Define your business, explain why you need to obtain the lease, and how the equipment will help your cash flow. Essentially, you want to prove to the lessor that you need the lease.
- Examine Your Credit
While some companies offer equipment leasing to startups without a credit history, you should still examine your history beforehand. Choose companies that accept clients with your current credit score and the type of history that you have. Some companies may not lease to businesses that have filed for bankruptcy or have poor credit.
If you suspect there may be issues due to your credit history, submit a letter explaining your credit history to increase your approval odds.
Afford the Equipment You Need
If you cannot afford to upgrade, replace or purchase equipment necessary to run your business effectively, then equipment leasing may be your solution. Before agreeing, ensure it is right for you and that you have all the required documentation. Learn more about how to lease equipment today.