It wasn’t too long ago that most companies were just resigned to the fact that items like computer equipment, office equipment, and phone systems were likely going to be paid out of cash or through funds available in the company operating loan.
The challenge was that these types of equipment financing opportunities did not provide any significant security to a lender or leasing company so it was traditionally difficult to secure financing outside of manufacturer related programs.
That’s all changed in the last number of years and now computer equipment financing is a growing part of most equipment financing companies’ portfolio.
From a lender or leasing company point of view, the reasoning here is that most computer equipment purchases are for relatively small amounts, predominantly under $100,00. And if the repayment period is stays within 3 to 5 years, the risk of loss to well established companies is statistically very low even though there isn’t a great deal of security inherit in the assets.
But the other thing that financing companies are trying to take advantage is the repeat business that technology continually creates. So by financing computer assets within a certain comfort zone of the lender and keeping the leasing or loan term short, there is a good chance that the financing will be repeated over and over again in the future as new technology continues to be incorporated into the client’s business.
Unless your company has a limitless source of cash on hand, its likely getting its capital from some form or combination of debt financing sources.
If computer equipment isn’t directly financed, then the money is coming from another source of debt financing available to the business for working capital or other purposes.
When other funds are used for acquiring computer equipment, there automatically is less capital available for everything else, so financing computer equipment directly versus indirectly can have a significant impact on cash flow.
The actual cost of computer equipment financing you are able to secure is going to depend on a number of factors that are unique to your business including the company credit profile and financial profile.
That being said, the actual cost of any source of financing is affordable if application of the capital you free up from computer equipment financing can be redirected into a profit generating or cost saving activity that is greater in value to the company than the cost of the equipment financing for computers, office furniture, and/or phone systems.
In many cases, you can secure computer equipment financing at or near 100% of the acquisition cost providing considerable debt financing leverage to your business.
If you’d like to know more about computer equipment financing and if it would be a fit for your business requirements, please give us a call and we’ll make sure you get all your questions answered right away.