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Equipment Lease Tips For Startup Businesses:
One of the main challenges faced by startup businesses is to get loans and meet their equipment and machinery needs with less cash in hand. Because it is difficult to get bank loans when you have just started your business, leasing may seem as a better option.
Some important tips to keep in mind while going for equipment leasing for startup businesses include the following:
- By choosing a leasing option, the startup business can reduce the time required for processing the equipment purchase. Bank loan approvals takes more time and credit verifications and analysis while leasing can be done in lesser time.
- The leasing procedure is less complicated and convenient
- In most cases there is no upfront down payment required and if required it is very less.
- The company should arrange rental lease payments according to their need and business requirements. Dealer can offer payments on monthly, quarterly, biannually or annual basis.
- The company must prepare the related paper work and documentation with careful analysis and legal help. The lease agreement is a legal document and binds the two parties by law. So all terms and conditions should be discussed thoroughly and the company should always seek a positive situation.
- The company must do its due diligence about the leasing company or dealer and its market reputation to avoid any scams. Also select the dealer and company carefully and do not put in lots of applications in different places. This might create doubts for the lender.
- All documents like tax returns, financial statements should be prepared beforehand.
- The company must prepare financial projection for the next 5 years to analyze the impact of the new machinery on the profit margins. It will also help the company assess its payment worthiness.
- The company should draft a comprehensive lease proposal with the type of business operations, reasons for seeking a lease service, the details of the machinery or equipment needed and other important aspects of the leasing requirements.
- The company and its members should maintain a good credit history.
- Many companies do not offer leasing services to new companies. Convince them with financial projections and credit worthiness to approve your application.
- Always try and select a leasing dealer that is industry specific and belong to your field. This will help them understand the situation is a better way.
- Always compare terms and conditions and costs for effective savings in terms of payments and financing.