In 2020, the economic climate is more volatile than ever. Construction has been an essential pillar of the economy for decades but it has been put to the test the past two quarters. This is due to firms making poor business decisions amid conflicting information and market insecurity. Financial burdens are the last thing firms want to deal with during a global pandemic, and because of this, construction sites are closing all over the country. Buying equipment outright is costly and can cause construction firms to crumble under financial pressure. Fortunately, construction equipment leasing is an alternative that provides a harmonized solution in a chaotic market. Leasing equipment can give firms a competitive edge in an overly crowded playing field.
Reduced Costs
This is certainly a clear advantage of leasing, as purchasing new equipment usually requires a large down payment, whereas lease agreements rarely require down payments. Construction equipment often costs hundreds of thousands of dollars to purchase new. Fortunately, equipment leasing eliminates the financial burden of ownership and instead allows customers to use the equipment for an agreed amount of time, paying for it monthly. Cash flow is a primary factor that is especially important in the commercial contractor industry, and leasing can free up cash flow that would instead be spent on a down payment for new equipment. Construction equipment leasing gives firms better control and clarity over how much they can spend. When sorting terms with a leasing company, you will know exactly how much your monthly payments will be which allows firms to strategically budget during harsh economic climates, so they can keep profits steady. Another advantage of leasing is its suitability to any budget as well as the tax advantages that are often associated with leases. This can be a bonus advantage of leasing that can further minimize the financial pressure that firms experience.
Flexibility
Construction equipment leasing provides reduced monthly payments in comparison with typical loan style financing. Additionally, leasing equipment for businesses gives firms the option to use machinery that they will only need for short periods, meaning jobs can be completed without purchasing expensive machinery that will only be used a few times. Leasing gives firms access to the tools they need and require without emptying their bank accounts. The flexible nature of lease agreements allows firms engaged in equipment leasing to maintain a stable bottom line by not spending more than what is necessary. Equipment upgrades are another flexible bonus of leasing, allowing firms to stay up to date with their equipment. Obsolete equipment is a serious anchor that can cause firms to sink, and leasing prevents this risk.
Used Equipment
When leasing equipment for business, firms have a platitude of options to choose from. For more innovative and modern jobs, expensive new construction equipment may be necessary to be competitive. However, not all firms need to take this path; used equipment is an ideal alternative and a cheaper path for businesses to access equipment with limited budgets. Construction equipment leasing also means that at the end of the term, you are not stuck with the equipment and can return it to the lessor.
Equipment Expertise
When partnering with an equipment leasing company, you will have industry experts working alongside you to ensure that the equipment you are acquiring is the right fit for your company’s operations and budget. When working with other financial institutions, such as banks, this is generally not the case and they are often only available to provide financing. An advantage of leasing is that equipment lessors have unique relationships with equipment manufacturers, as well as distributors, meaning they can pass the convenience and savings down to the customer. Additionally, a unique finance solution can be customized to fit the customer’s specific business needs. Here at Meridian, our subject matter experts have over 40 years of experience in delivering successful finance solutions.
Overall, there are many advantages of leasing. Construction equipment leasing gives firms who may be struggling during the current economic hardship a strategic pathway to complete jobs without breaking the bank allowing them to preserve cash. The leasing experts at Meridian Leasing can walk you through every step of the process. If you have any questions about equipment leasing feel free to give us a call at +1 (855) 980-4578 or send an email to [email protected] for more details or to speak with an equipment specialist.