Christian Business Computer Financing
Small Christian business computer financing may be one of the most important issues tackled when a start-up commerce venture is considered. In the end, the difficulty may really come in attempting to find the right machines for the particular needs of the enterprise owner. The financing itself may not be difficult to obtain, especially if the commerce credit history is good. Business computer financing can come from several different sources including the traditional sources and some that may be a little more outside the box in possibility. But the first step is the right choice of pc system.
One of the worst decisions any small commerce owner can make is an initial wrong choice of computer system. Since business computer financing may come down to how much of a loan is needed, why make a quick choice that may result in having to start over again with a new system in a few years? When choosing the right business pc system, every care must be made to make sure that there is enough memory to handle large databases and that the machine can be expanded for more sizable capability in the future. Getting these types of systems may cost more in the beginning, but will be worth the business computer financing investment over time. The question then arises about how to actually finance the purchases.
Conventional wisdom would say that the first place to stop for business computer financing would be at the bank. In most cases the bank, the most conservative of all lending institutions, offers the best interest rates on commerce loans. Of course their requirements for borrowers are also the highest of any other source. Before the September financial crisis, banks had a modicum of allowance for credit blemishes compared to other lending sources. Now no one can really know what the future holds, but the events happening recently portend a very tight credit atmosphere in the foreseeable future. This means that former cumulus cloud high requirements will now become stratospheric with banks soon, if not already.
So if an enterprise does have a flawed credit record, what is the next step in getting these computers financed? Consider the option of equipment leasing which gives tax benefits, no down payment requirements, and a chance to upgrade when something becomes obsolete. When equipment is bought outright, the equipment can be depreciated over time. This may give the commerce roughly a 20% value of the equipment each year for depreciation over five years, much of this depending on exactly what kind of equipment is being discussed. But leasing allows the full amount of the monthly lease to be deducted each year as enterprise expense. But since each enterprise is different, each circumstance should be explored for its own merits and liabilities. Sometimes buying the equipment is the better choice.
But there may be some non-traditional sources for outright purchase if the credit is shaky and the desire is to purchase. Consider business computer financing underwritten by what is known as a factor. A factor is an investor who offers to loan money for a percentage of invoices that commerce generates. In fact, factoring can be arranged in a number of different ways for business profitability. Some arrangement include providing cash up front for invoices, money for orders that are placed but not yet billed, and even money for bills that come in before money arrives from billable invoices. All of these are based on full repayment and a commission on commerce income. So the consideration of factoring may be an option and an enterprise owner may want to look at finding a hard money lender in the area.
Another untraditional source of business computer financing is from an angel investor. This is a wealthy individual, probably living in the same geographical area as the enterprise. For a business owner seeking angel financing, a very well thought out business plan and an impressive financial statement must be present. Only a very few angel provided funding agreements are ever approved, but for the one really needing cash for equipment, no opportunity should be overlooked. Factoring money, sometimes known as hard money, as well as angel financing will usually have high interest rates. One of the great salvation prayers of scripture is found from the pen of King David in Psalm 25. "Lead me in thy truth and teach me: for thou art the God of my salvation; on thee do I wait all the day...remember not the sins of my youth, nor my transgressions..." (Psalm 25:5,7a)
Of course, there are the charge accounts that are available at computer stores. Their finance charges will be at least as high as credit card interest rates, but if a person can get an introductory low percentage rate that may save some money for the business. Finding sources for business computer financing may become more and more difficult for owners with the recent bank failures and the crisis on Wall Street. Analysts are predicting that only the most pristine of credit histories will be allowed credit for at least the near future. Strong and clear business plans as mentioned in regards to angel financing may ultimately be required for even low ceiling credit cards and businesses not passing the credit smell test will be vulnerable to finding very alternative financing solutions. Going to this kind of credit pedigree may find some owners on the corner selling lemonade for capital.
Christian Business Equipment LeasingBusiness equipment leasing is a viable alternative to buying tools that may be obsolete within a few years. Heavier gear such as bulldozers, semis and other very heavy machinery have a shelf life much longer than a copier or a computer may have, and might be candidates for outright purchase, but of course the bottom lines comes down to the crunched numbers. In many cases, business owners find that commerce tool leasing for office technology is the best solution financially. Companies that offer leases on all types of office gear are eager to help customers discover which method, leasing or buying, is sounder for their particular situation. It's a dog eat dog world out there, and circumstances can sometimes cause resentment and even bitterness towards those who make our doing business more difficult. But Jesus reminds to watch our attitudes when He says, " Love your enemies, bless them that curse you, do good to them that hate you and pray for them that despitefully use you and persecute you." (Matthew 5:44)
Companies that lease new office gear first buy the tools, be it a copier or a computer and lease the machine to the company making the purchase order. The customer commits to a business equipment leasing agreement for a specified period of time, making monthly payments on the equipment until the end of the agreement. When the time period is over, the customer may continue the lease agreement, buy the gear at an earlier agreed price, turn the gear back into the lessor and either lease or buy new gear. Customers often agree to continue lease agreements because it gives immediate tax benefits that buying gear from the beginning doesn't offer. A look at lease agreement benefits can help clear some confusion. Consider some of the options of office equipment customers.
Most office equipment leases are of the fair market value type which enables the customer to buy the gear and the end of the agreed lease period for market value. That might not work out because fair market value can mean much higher costs than if the customer looked around for the same used gear from a private or discount source. The other type of lease is more expensive during the life of the lease and is called a finance lease. This business equipment leasing agreement allows the customer to buy the office gear at the end of the lease period for as little as a dollar. That agreed on price is set at the beginning of the lease so there are no surprises.
Getting into a lease for the right amount of time can be tricky. Business equipment leasing agreements can be crafted for as few as twelve month all the way to sixty months for office equipment. The problem can rise, however, that an enterprise could be stuck with a Nash Rambler in an era of SUV hybrids with the pace that technology upgrades experience. Yet if the agreement is too short, one may not get the full cost benefit of the lease agreement. But the length of office equipment leases is not the only concern.
One must be very clear about the limits and coverage that are a part of the agreement. Who must pay for repairs if the computer breaks down? If the copier one day says that it's tired of copying and wants to be an espresso machine, whose responsibility shall it be to send the copier to a shrink for evaluation? If the lease is like an auto lease, it will be the lessee's bill to foot. Better make sure of the details. Someone has wisely said that trouble dwells in them!
Business equipment leasing offers a different kind of tax deduction that outright purchases of gear can't offer: the ability to deduct every monthly lease payment on business taxes lowering the actual cost of the lease so that the business has more money for other needs. Business equipment leasing also means that there will probably not be a down payment needed, keeping the cash flow moving and leasing can also make it easier to move into upgraded gear if the need arises. But there also downsides to this approach that may not be obvious. Usually business equipment leasing means that the lessee will pay quite a bit more for the office gear than purchasing outright. There is no equity put into the office tools, although all of this electronic gear does have obsolescence and equity may only amount to mere dollars at the end of the gear's life. In some lease agreements, the office gear can be returned when not needed anymore, but of course this lease will cost more. The other alternative is a lease that keeps on billing even if the office gear is not needed.
Outright buying of needed office gear might be more appealing than business equipment leasing. This would particularly be true if the Christian business does have the money upfront to pay for the needed office tools. Tax incentives allow full deduction of some business equipment expense up to one hundred and twelve thousand dollars. And there is depreciation that can be done to other gear that makes the tax burden considerably lighter. Of course, when buying electronic gear outright, it will become extinct in a few years, making a three thousand dollar purchase worth perhaps five hundred in sixty months or less. There are a number of online leasing calculators to help a commerce owner figure out just how much leasing can save or cost him.