Thinking about leasing apparel decorating equipment to expand your shop’s offerings? Keep the following in mind.
The benefits: With leasing, you don’t have to lay out a hefty lump sum to buy equipment outright. Even if you’re financing a purchase, the monthly payments with leasing are less expensive than if you’re buying, says apparel decorating lease expert Mark Stephenson, director of marketing and sales at ColDesi Apparel Decorating Systems. With leasing, your cash flow is freed to spend on marketing and sales efforts. Not only does leasing help get you a profit-producing piece of equipment that you may not have been able to afford, but it also opens the door to tax advantages, since lease payments are deductible. Standard maintenance is included with many leases too.
Things to consider: Be aware that a disadvantage to leasing is you’re not building any equity in the machine. When the lease is up, you give it back, unless you’ve negotiated – and exercise – a purchasing option. Furthermore, failing to build equity can leave you in a tough situation: You may rely on the equipment, but not have the money to purchase it outright or afford the lease payments on a newer, pricier model.
The process: Once you determine a machine is right for you, you’ll fill out a leasing application and could be directed to work with a financing company partnered with the equipment provider. “The application is pretty in-depth,” Stephenson says. In addition to banking information, you could be asked for credit references and you’ll probably have to detail what type of legal entity your business is. You may also be asked to reveal any terms you have with vendors. If you have outstanding credit, your leasing application can often be approved in a couple days for an especially low monthly rate, Stephenson says. If your credit is choppy, approval can take longer and your monthly payment will likely be more.