Business Equipment: Should You Lease or Buy?

Whether you are in construction, manufacturing, healthcare, tech, or any other industry, the success of your business relies, in part, on having access to the right equipment. However, the decision on whether to purchase or lease your business equipment can be very polarizing, with decision makers on either side presenting valid arguments.

The Benefits of Purchasing Business Equipment

Purchasing business equipment offers a number of advantages. First, depending on the type, equipment can increase the equity value of your business portfolio. Business equipment that you purchase and own can be leveraged to allow for greater amounts of financing, be it as collateral for a loan or for specialized programs for increased liquidity, such as leaseback financing. Purchased equipment also allows businesses to claim depreciation when filing taxes, which can offer a lot of savings for the first few years after the initial purchase. Most businesses that purchase equipment want to increase their fixed assets and choose pieces that are going to play a regular part in production and day-to-day operations.

The Benefits of Leasing Business Equipment

Leasing business equipment also has a number of advantages, especially for new and small companies that might not want to pay the initial outlay for larger pieces. Leasing allows businesses to access the equipment they need with manageable monthly payments. By leasing equipment, businesses can take advantage of a number of add-on benefits as well, such as maintenance, training, and the ability to “trade up” to newer and better models as they become available. This is a great solution for businesses in fields that rely heavily on advancements in technology, such as IT or healthcare. While businesses that lease equipment cannot claim depreciation, there are other tax benefits. Payments on leased equipment can be claimed as deductions when filing taxes, up to around $500,000. Note that the guidelines for these deductions are subject to change, so meet with your accountant to get the most savings possible from leased business equipment.

So Should You Lease or Buy?

Ultimately, the answer comes down to how you use the equipment. If your business is in an industry that makes regular advances, or your equipment is subject to heavy wear and tear, then leasing may be the logical decision. If you need access to certain equipment on a regular basis and want to increase the equity value of your business, then purchasing may be right for you.

Approved Business Lending offers programs for both purchasing and leasing equipment. Contact our offices to learn more about the benefits of both programs, and get access to the equipment you need for continued success.


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