According to the Equipment Leasing and Financing Association (ELFA), nearly 8 out of 10 companies in the United States rely on some form of financing to acquire new equipment. This includes methods like equipment loans, lines of credit (LOC), and leases, helping companies manage their working capital and maintain cash flow.
Despite equipment leasing being an effective solution for small businesses and large enterprises alike, many common misconceptions persist around this financial strategy. Myths about hidden fees, rigid terms, and limitations often cloud the decision-making process for companies considering equipment leasing.
In this article, we’ll dispel 8 common myths surrounding equipment leasing to provide clarity on why leasing could be a valuable option for your business.
This myth suggests that leasing limits you to a narrow selection of manufacturers, especially when working with traditional lenders or leasing companies. While this might be true with some providers, it’s not universally the case.
Reality: Companies like Excedr offer flexible leasing options without being tied to specific manufacturers. This means that whether you need specialized scientific instruments, lab equipment, or general business equipment, a wider selection of makes and models is available, giving you the ability to lease exactly what your business needs.
The fear of hidden fees and penalties often makes businesses wary of leasing. While some lessors may include additional fees in their agreements, this isn't always the case.
Reality: Transparent leasing companies will clearly outline all costs in the lease contract, avoiding any unpleasant surprises. At Excedr, for example, we ensure that our lease agreements are straightforward, eliminating any hidden fees or penalties. Companies can focus on their business needs without worrying about extra costs.
Another misconception is that leasing companies impose rigid terms that make it hard to adjust the lease as business needs change over time.
Reality: While some leasing providers may have fixed lease terms, many offer flexible options that can be tailored to your company’s needs. At Excedr, for instance, you can customize your lease length, payment structure, and even negotiate buyout or end-of-lease terms. This flexibility ensures that your equipment leasing aligns with your business’s evolving operational needs.
Many business owners assume that leasing is only applicable to big-ticket items like large-scale industrial equipment, leaving small businesses without options for smaller, critical purchases.
Reality: Equipment leasing is not limited to large purchases. Businesses can lease a wide range of equipment, including laboratory instruments, office machines, and specialized devices. Additionally, companies like Excedr streamline the underwriting process, making smaller leases quicker to process and approve.
Some businesses are under the impression that leasing or financing equipment is a long, drawn-out process, delaying the time it takes to get equipment into the hands of those who need it.
Reality: While traditional bank loans may take 60-90 days for approval, modern leasing companies have significantly reduced the time it takes to process applications. Excedr, for example, can approve applications in as little as three days, allowing companies to get equipment sooner and keep operations moving forward.
It’s a common belief that leasing is more expensive than purchasing equipment outright due to interest rates and monthly payments. This myth is rooted in the perception that total lease payments often exceed the purchase price.
Reality: While leasing includes costs like interest, it offers unique advantages such as preserving working capital and avoiding large upfront costs. Leasing allows businesses to spread costs over time, providing greater flexibility for managing cash flow. This is especially important for small businesses or new businesses that need to focus on growth without locking up capital in depreciating assets.
Purchasing equipment is perceived as a simpler option since you pay upfront and own the asset immediately, whereas leasing may seem like a more complicated financial arrangement.
Reality: Leasing simplifies financial planning by consolidating costs into predictable monthly payments. This reduces strain on your cash flow and eliminates the need for hefty down payments. Plus, leasing companies often include maintenance and service coverage in their agreements, further simplifying equipment management.
Some businesses believe that equipment leased through a provider cannot be shared, making leasing seem less efficient for labs or companies sharing resources.
Reality: Leasing companies like Excedr encourage equipment sharing to reduce costs. You can share your leased equipment with another lab or department, provided that the leasing company is informed and both parties agree on the sharing arrangement.
Leasing can be a powerful tool for small businesses and startups, enabling them to manage cash flow effectively and acquire essential equipment without sacrificing capital reserves. If you’re interested in exploring flexible leasing options, request a lease estimate from Excedr today.
