• Industry Overview
• ELT Magazine
• Member Listing
• Career Center
• Equipment Finance 101
• Basics
• Benefits
• Compare Loan/Lease
• Finance Types
• Choose an Option
• Resources

Choose an Option

To help arrive at financing solutions most suitable for your business, consider the following list of questions that, depending on your answers, suggest various types of financial products listed in Types of Financial Products. The questions may help direct your decisions but are not intended to make them for you.

Experts at equipment finance companies, or independent resources, can assist with or review your analysis to help you arrive at the financial solutions best suited to your business's needs and structure.

• If any of the benefits of leasing apply to you, is a lease right for you?
  If the benefits of leasing outweigh your other objectives, consider leasing your equipment and related assets. The type of lease depends on your circumstances. Ask a lease advisor or leasing lawyer for assistance.
• How long do you expect to use the equipment?
  If your need for the equipment will expire before the end of a financing term, you may want to consider an operating lease because such a lease charges only for the time the equipment is used. If you expect to use the equipment until the end of its life, an equipment or term loan may be the best option.
• Will your cash flow support a one-time, full-price payment for the equipment?
  If so, it may be most suitable for your company to purchase the equipment outright and deduct the cost (the IRS allows deductions under Section 179 of the IRC up to $125,000 during 2007 and $128,000 during 2008 for qualified property). If you do not elect Section 179 treatment, you should be able to depreciate it annually in accordance with prescribed methods.

  If your cash flow will easily support full payment, you may wish to consider a term loan, which usually requires a down payment. Conversely, if you wish to limit your use of cash, an operating lease, which does not typically require a down payment, may enable you to time payments to the cash flow of your business operations.

• Do you need capital and have equipment that is already paid for?
  If so, you may want to consider a sale-leaseback. Under this arrangement, a finance company pays you cash for the equipment and then leases it back to you while you continue the uninterrupted use of the equipment.
• Is disposal of your equipment regulated by federal or state law?
  If so, your company may be best served by shifting the risk, if feasible, of equipment management and disposal to an equipment leasing and finance company. In any case, your company may be required to dispose of the equipment on its own under the terms of a lease.