Anyone who doesn’t want to purchase outright or may not qualify for a loan through traditional bank funding.
Heavy equipment handles heavy work and commands a heavy price. Paying that price can pay off in terms of business growth and other benefits. There are a few ways that companies can add heavy equipment to their fleets. Buy outright, partner with another company to share heavy equipment assets, finance a purchase loan, and finance a heavy equipment lease. The last is a popular choice because it comes with many benefits.
But before we get to the benefits, let’s lay the foundation about heavy equipment and financing a lease.
What does it mean to finance a heavy equipment lease?
Heavy equipment lease financing means you get a loan to finance your new or used equipment, so you don’t have to purchase it outright. The equipment itself acts as collateral for the financed lease.
What types of equipment fall under the “heavy” category?
Heavy equipment, also called construction equipment, includes equipment that moves earth, performs construction or does similar heavy-duty work. Examples of such equipment include:
- Bulldozers
- Engineering equipment
- Forklifts
- Tractors
- Excavators
- Backhoes
- Material handlers
- Pavers
Lease Financing isn’t Only for Cash-Strapped Business Owners
Even with sufficient cash to purchase heavy equipment outright, many business owners choose to reserve their cash for working capital or invest it in other activities that spur growth. Others prefer to take advantage of lease agreements specifically designed for the heavy equipment industry, as well as their company’s future needs and budget given the hefty price of such machines.
Heavy equipment’s hefty cost makes even the largest businesses pause. When you’re a small business or your credit isn’t perfect, obtaining heavy equipment is even more difficult. Financing your heavy equipment lease is ideal for businesses that need to get used or new equipment but can’t afford or don’t want to make payment in full or may not qualify for a purchase loan through traditional bank funding.
READ: Financing an Excavator: Even if You Have Bad Credit
Take Advantage of the Tax Benefits
Financing a lease for your heavy equipment comes with tax benefits that incentivize business owners to start or expand their companies.
Under Section 179, you can deduct the full cost of heavy equipment up to $1 million in the year of purchase. Section 179’s advantage is that you don’t have to depreciate the cost of the equipment year over year, taking the tax savings in one year.
If you don’t qualify for Section 179 or your tax professional suggests against it, another option is to write off loan interest or lease payments as business expenses on your tax return.
Another option is to depreciate your heavy equipment every year and take a small tax deduction over the useful life of the equipment. A conversation with your tax expert or accountant can help ensure you take advantage of the tax benefits of financing a heavy equipment lease.
READ: Why Put Profit Above an Equipment Lease Payment?
Global Financial & Leasing Services (GFLS) works with many business owners to help them get the heavy equipment they need. Begin the application process and our team will do everything we can, plus we can approve heavy equipment lease financing in as few as 24 hours.
