Eight Reasons to Finance Equipment for Your Business
Indian infrastructure sector is growing at a scorching pace. Be it highway or rural road, railway or home construction among other projects, every infrastructure segment is picking up pace. In fact, it is estimated that by 2025, India’s infrastructure market will emerge as the third largest in the world, which would exhibit huge demand for Construction Equipment (CE). That said, today every construction company wants to acquire the latest machinery in order to increase productivity and improve profits. However, not every construction company has that huge capital to purchase the costly CE. Here, comes the importance of equipment financing.
So, what is equipment financing? Well, equipment financing is the use of a loan or lease to purchase new equipment for your business. Now, you may be wondering as to what are the benefits of equipment financing. So, here is a list of eight reasons that can make equipment financing good proposition for your business.
1. Caters to urgent equipment need in business: Equipment financing makes most sense when you need to immediately employ an important business equipment to work but don’t have adequate cash to purchase it.
2. You need technologically-advance Construction Equipment for short-term: When you know that you need a technologically-advanced equipment particularly for a short term and after that, you would not need that equipment at all, then it makes sense to opt for the equipment lease option. Through this type of equipment financing, you could employ new and better equipment for your work.
3. Accelerate your ROI: Rather than paying lump sum for the equipment, through equipment financing, you can make smaller payments while the equipment generates revenue for you. Thus, equipment financing can positively impact your business and ultimately result in faster business and revenue growth.
4. Saves your cash for other things: When you choose to finance your equipment, you are actually not hampering or limiting your cash flow which can be used for other importance purposes in business. So, the cash-on-hand can be used to spend on new opportunities, unexpected expenses and other costs. Many equipment financing companies offer low rates and favorable repayment plan as well. Simply put, when you opt for equipment financing, you incur lower up-front cost since you don’t have to make a down payment as compared to purchasing the CE.
5. Guards against inflation: Equipment financing can really help your business hedge against inflation risk. This is because you will be making payment at a fixed time to the lender who will actually have to absorb the devaluation of these payments over the course of the financing term due to the inevitable inflation. Simply put, locking in an interest rate and monthly price can keep you from getting hit with the negative impacts of inflation. However, for that, it is essential that you have a solid contract in place.
6. Asset management can be outsourced: When you opt for equipment financing, then it is the equipment financing company which will manage your equipment from delivery to disposal. Also, you don’t have to worry about equipment maintenance, repairs and depreciation as the equipment financing company will only arrange for routine maintenance and inspections.
7. 100 per cent financing option is a boon: Some equipment financing companies offer 100 per cent financing option and need no down payment. This again can be a boon to your business.
8. Leads to improved credit: If you have opted for equipment financing and then, you are making on-time payments, then it can have a positive impact on your business credit score as well.
So, looking at the benefits, it clearly makes sense to opt for equipment financing through use of a loan or lease. While banks can provide you loan for equipment financing, there are many Construction Equipment manufacturing companies that give equipment on lease. One amongst them is Mahindra Construction Equipment (MCE) that leases heavy CE like backhoe loaders, motor graders etc.
Benefits of leasing equipment from MCE
The unique proposition of Mahindra Construction Equipment include robust and maintained equipment, trained, competent and experienced manpower resources with the equipment, onsite repairs and maintenance to reduce machine downtime and production loss at customer site, advice on equipment suitability based on applications and training of operator level personnel for various industries.
Apart from this, the other benefits of leasing equipment from MCE include...
1. Less need of capital as MCE leases the equipment at affordable rates.
2. New and updated technology can be employed to work.
3. Reduction in down time as 24*7 service support is provided by the company.
4. Saving on storage/warehousing cost as the equipment can be returned after the work is done.
5. Savings on repair and maintenance cost as it is taken care of by the company.
6. Savings on manpower and administrative cost as there is no need for mechanics or the staff which is provided by the company.
MCE offers following operating lease options to its customers:
1. Dry lease: Here, only the equipment is given on lease and the customer is responsible for all the maintenance, fuel and operator costs.
2. Wet lease: Under this, two types of options are provided by MCE. In the first option, MCE provides equipment as well as operator support and the customer is responsible for maintenance and fuel related expenses. In the second option, MCE provides the equipment with operator and maintenance support and the customer is responsible for fuel support.
In a nutshell
Looking at the above mentioned points, it clearly makes sense for the construction companies to opt for equipment financing option to support the large-scale projects, ensure speedy and timely completion of work at the jobsite and support India’s dynamic infrastructure growth story.