How to Get Construction Equipment Financing
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 bear in mind both options, both of which have benefits and drawbacks.
Construction Equipment Purchased Using a Business Loan to Buy
Construction equipment does it become obsolete like a lot of other types of collateral investments that a business will take on. For years, bulldozers, backhoes, and other construction equipment have endured. You don't see a lot of changes in this type of equipment because it is a time-tested technology. When maintained properly, it will last for years for the construction company owner.
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.
Leasing Construction Equipment Has Its Benefits
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
When the lease is structured as a true lease, the end-user can declare the entire lease payment as a business expense. For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
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.
Plan Early for Your Construction Business
As a business owner, there are a lot of things to think about when obtaining construction equipment financing. One of things is the method of payment and how it affects you financially with taxes and everything else. Make sure you check the all angles and consult with a tax consultant Plan ahead, and you will do fine with your construction business!
Construction Equipment Purchased Using a Business Loan to Buy
Construction equipment does it become obsolete like a lot of other types of collateral investments that a business will take on. For years, bulldozers, backhoes, and other construction equipment have endured. You don't see a lot of changes in this type of equipment because it is a time-tested technology. When maintained properly, it will last for years for the construction company owner.
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.
Leasing Construction Equipment Has Its Benefits
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
When the lease is structured as a true lease, the end-user can declare the entire lease payment as a business expense. For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
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.
Plan Early for Your Construction Business
As a business owner, there are a lot of things to think about when obtaining construction equipment financing. One of things is the method of payment and how it affects you financially with taxes and everything else. Make sure you check the all angles and consult with a tax consultant Plan ahead, and you will do fine with your construction business!
About the Author:
Need financing for your construction business? Wall Street Capital Financing can help! Read more at Financing Construction Equipment.
posted by Debt Consolidation Loan at
6:20 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home