Christian Small Business Equipment Financing
Taking advantage of Christian small business equipment financing can help a company meet important needs without impeding cash flow. Necessary supplies, machinery, technology or other items can be either purchased outright or can be leased. Big ticket items such as industrial machines or office furnishings can constitute a large financial outlay for most businesses. Money that could have been spent in other areas can become tied up in the purchase of pricey apparatus. For this reason, many companies prefer to lease these items rather than buy them. There are many benefits to leasing including savings on taxes, repairs, depreciation, and technological updates. When a company invests in computers, software or other technology, these important tools can quickly become obsolete and require an expensive reinvestment. Many providers of these products do not require a hefty down payment for companies that lease. Also financed in most lease agreements are tax expenses as well as the cost of delivery, maintenance and installation. It can also be much easier to obtain small business equipment financing when compared with other funding. Approval for leases that cover supplies and apparatus under a certain financial threshold will often not require the potential borrower to present business plans, or other fiscal information such as tax returns or financial statements. The amount of time required to approve these leases can be considerably less as well.
With all of these benefits, companies that are seeking small business equipment financing may still choose to purchase these items outright rather than lease. Some company owners may wish to be able to hang on to commercial machinery permanently rather than having to turn it in at the end of a lease. When only a small amount of machinery is needed, ownership may be the wiser choice. However, when an entrepreneur is not sure, many suppliers can help businesses compare options by performing a lease versus purchase analysis. Tax expenses and residual values are considered in this analysis. If a supplier can gain more benefit from a lease than a sale, or vice versa, this analysis may not be completely objective. Bargains on used machinery or equipment may make purchasing a wiser choice. A major benefit of choosing leasing as a means of small business equipment financing is that, in some cases, leased items do not have to be recorded on a company's balance sheet. When a company chooses to lease, the cost of the lease can be used as a tax deduction up to a certain threshold. Other reasons to choose a lease over a purchase are to keep up to date with current technology and to better manage assets.
A major concern of anyone who is considering leasing as a means of small business equipment financing is residual value. At the end of any lease, there will be a certain amount of value still left in the items. This is called residual value. A lesser is concerned about this as well. When the lesser takes possession of the equipment after a lease has ended, they may wish to sell the used apparatus. If there is little hope of selling the items for even a fraction of their original price, then there is no residual value left. Some leases will allow the client to purchase the apparatus at the end of a lease and some clients will have the opportunity to own the equipment when the lease is up without paying additional money. When this is the case, residual value is very important. Technological products such as PCs, laptops, printers, or copiers may not be worth keeping at the end of a lease due to the likelihood of obsolescence. Other types of products came become obsolete as well. In addition to technological obsolescence, a company will also have to cope with functional obsolescence. When furnishings and apparatus wear out over time and begin to look shabby or can no longer perform the role intended, the products have succumbed to functional obsolescence. The end result will be a lack of residual value.
Before signing a lease for small business equipment financing, an entrepreneur should make sure that they have chosen a lesser that specializes in the kinds of items that they need. In addition to traditional equipment such as machinery, technology or office furnishings, some providers may offer anything from automobiles to cubicle dividers. It is even possible to lease barges, rail cars, or even jet planes. The length of the small business equipment financing lease will depend largely on the type of merchandise that is needed. Many leasing companies will simply calculate the life of the item and lease it out for roughly seventy five percent of the equipment's expected lifespan. Building an enduring and successful business can have an impact for generations to come. The Bible talks about the importance of telling the next generation about God. "I will sing of the mercies of the LORD for ever: with my mouth will I make known thy faithfulness to all generations." (Psalm 89:1)
There are other additional options available within the area of small business equipment financing. Purchasing leased items when an agreement ends is a common practice, assuming that the items have not become obsolete and therefore are of little value. The lesser may offer the merchandise to the client at what is considered a "fair market value." Early buyout options are also something to consider. These options allow the client to cancel the lease through an out right purchase of the leased merchandise.
Christian Small Business Startup FinancingAcquiring small business startup financing can be one of the greatest challenges facing hopeful entrepreneurs. The beginning phases of any new commercial venture can be the riskiest. Many lenders do not wish to take on the extra risk of getting a new company going. Funding can come from a variety of sources, but will most often come from an owner's personal savings. A solid business plan and persistent approach can sometimes entice traditional lenders to approve a loan. Borrowing from relatives and friends is another popular method of gaining small business startup financing. Other funding sources might be individual investors, loans that are guaranteed by the government, or venture capital firms. When an entrepreneur furnishes their own cash, they can choose from a variety of potential sources. Savings accounts might provide enough startup cash to get things rolling. Home equity loans or lines of credit might also be available. Selling or borrowing against personal assets is another approach that could work. When an owner contributes his own money, he can do so in one of two ways. He can consider the funding as a purchase of equity in the company, or he can offer the funds as a loan. Family and friends may be willing to supply funds in the same way, by purchasing a stake in the company or as a loan.
When an entrepreneur supplies his own small business startup financing, it is often referred to as bootstrap financing. A major benefit of this approach is that the worth of the company will be higher from the very beginning since debt is held to a minimum. Significant savings in interest payments are another benefit since the entrepreneur does not have to take out a loan. If additional funds are needed, lenders might be more inclined to approve loans since the owner has enough faith in the organization to put his own money on the line. Potential investors might be more willing to contribute funding for the same reason. If a new venture receives an order from a customer, that customer can also be an aide in getting funding. If the customer will provide a letter of credit to the company, that letter can translate into security for credit with suppliers. Creative use of real estate can be another source of bootstrap financing. Leasing a facility rather than purchasing one is an example of this approach since it will reduce the amount of startup cash that is needed. Borrowing against the equity in an entrepreneur's personal home can also supply needed small business startup financing. Sound financial management can work to the advantage of a new commercial venture. By cutting back on the money needed to get things rolling, companies are, in effect, gaining a needed financial foothold without borrowing funds.
Government insured funding in the form of Small Business Association, or SBA loans can be another good source of small business startup financing. These funds are guaranteed by the United States government and are generally offered by traditional lending institutions. There are a variety of lending programs that come under this heading. These could include 7(a) loans, 504 loans, or micro loans. The attraction of these loans for lenders is that even a partial guarantee removes a good deal of the risk. Within the category of 7(a) loans are a variety of lending programs including the Lowdoc program, and the SBA Express program. A 504 loan will generally be used toward needed business assets. These assets could include equipment, land or real estate. Most programs are generally only available to companies that meet certain size restrictions. In addition to these programs, there are many other SBA loans that can provide small business startup financing. Another way to save money when launching a new commercial venture is to lease items such as office furnishings, computers, copiers and other office equipment, manufacturing machinery, phone systems or even company cars. Venture capital firms might also be willing to provide needed funds. These firms will only come on board if they believe that the new company has great potential for growth and profit.
Credit cards can be another source of small business startup financing. While interest rates may be higher with this approach, an entrepreneur may find that borrowing in this manner can be both quick and easy. The danger of using credit cards, particularly the personal credit cards of a business owner, is that if the company has a slow period and payments can't be met, an owner's personal credit rating could be hurt. However, when a company's borrowing options are limited, credit cards or commercial lines of credit may be the only available option. An entrepreneur should always keep in mind that accumulating a large amount of credit card debt can be a risky approach when launching a new venture. Acquiring partners who can help shoulder this burden and share the risk might make the difference between the success and failure of a startup company.
Many Christian entrepreneurs turn to family and friends for needed small business startup financing. Some family members may be willing to extend a loan to a trustworthy loved one, or may even be willing to invest in the venture themselves. Having friends and family to lean on can be a real blessing. The Bible describes the great blessing of turning to God in times of trouble. "Hide not thy face from me in the day when I am in trouble; incline thine ear unto me: in the day when I call answer me speedily." (Psalm 102:2)