Get The Financing to Buy Construction Equipment
Thinking of getting construction equipment financing? If you look at it carefully, there are two options. You either lease or you buy the equipment outright with a loan. A construction equipment owner has to consider both options, both of which have benefits and drawbacks.
Construction Equipment Purchased Using a Business Loan to Buy
Equipment used in the construction industry in most cases will not become obsolete during the life of the technology. For years, bulldozers, backhoes, and other construction equipment have endured. You don't see a lot of changes in heavy equipment because they are a time-tested technology. When maintained properly, it will last for years for the construction company owner.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. However, we have found that unsecured lines of credit offered the small business person all the extra working capital they need, with requiring collateral. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
The thing about a true release is that the business owner can claim the entire lease payment off on business taxes, For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the idea of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. Business startups especially like using a lease agreement. It just makes sense. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Make Plans to Succeed in Your Construction Business
Whatever option you go for, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. Plan ahead, and you will do fine with your construction business!
Construction Equipment Purchased Using a Business Loan to Buy
Equipment used in the construction industry in most cases will not become obsolete during the life of the technology. For years, bulldozers, backhoes, and other construction equipment have endured. You don't see a lot of changes in heavy equipment because they are a time-tested technology. When maintained properly, it will last for years for the construction company owner.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. However, we have found that unsecured lines of credit offered the small business person all the extra working capital they need, with requiring collateral. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
Tax benefits is the number one reason that business owners generally lease construction equipment. This is especially true in terms of what is called a "true lease", where you get a 100% deduction.
The thing about a true release is that the business owner can claim the entire lease payment off on business taxes, For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the idea of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. Business startups especially like using a lease agreement. It just makes sense. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Make Plans to Succeed in Your Construction Business
Whatever option you go for, you need to consider where you need to put the money, the long term effects, how much you will save in terms of tax breaks and more. Plan ahead, and you will do fine with your construction business!
About the Author:
Need money for your construction business? Wall Street Capital Financing can help! Read more at Financing Construction Equipment.
posted by Credit Counseling at
1:59 PM
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