Construction Equipment Financing
The Guide to Construction Equipment Financing
Construction Equipment Financing – The Decision Your Company Must Make
Construction equipment financing has two primary options, loan or lease. As the
owner of a business that typically uses construction equipment, the business
owner has to consider both options which have their own advantages and
disadvantages.
Advantage of Buying Construction Equipment Using a Business Loan
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
business 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. Furthermore, the equipment that is bought can
be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
The primary benefit of leasing construction equipment is that it offers great
tax benefits to business owners. This is especially true in terms of what is
called a "true lease", where you get a 100% deduction. If you do not know what
we mean by a true lease, the Internal Revenue
Service uses the term "true lease" to define how it 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.
The fact that you can often get the equipment that you need without any down
payment is one of the primary benefits to some. Businesses, like start-ups, that
are not flush with cash love this aspect if they can find it. Lease payments are
typically fixed for the term of the lease and give the business owner a good
idea what to budget.
Choose The Best Route For Your Construction Business
Whatever route you choose, you need to consider where you need to put the money,
the long term effects, how much you will save in terms of tax breaks and more. I
would advise that you consult with a tax consultant and think long and hard
about the long term goals of your construction company.
WALL STREET CAPITAL FINANCING can lead you through the process. Contact us using the form above to right. Or click here.
Fill Out The
Business Financing Application Below!
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