One of the biggest obstacles to opening many types of business is the fact that a tremendous amount of startup capital can be required. Anything that relies on having major equipment available, whether it is vehicles or manufacturing tools, can require so much money to purchase the goods to even get started that it is virtually impossible for any individual to raise the money necessary. This is why it is so important for people who are going into business to understand that there are startup business equipment leasing options that can make starting a company much more accessible.
The concept behind new secured business loans is very similar to that of leasing a car. If you do not have the money to make a purchase outright, or do not want to commit that amount of cash up front, you can lease it instead. In the case of equipment, this usually means that the lender will actually be buying the piece of equipment and then renting it to the intended user at a set rate for a set period of time. At the end of that time, the person who took out the lease will have the option to either just let the agreement expire, or go ahead and purchase the item and keep it. The price at that point can either be set in the original contract or based on a fair market rate at the time of purchase.
This kind of startup business financing can make sense, even if you actually have the cash on hand to make purchases outright. Leasing does tend to be more expensive on the whole than a purchase, but it also leaves you with a lot more cash on hand in the short term. The worst period for cash flow when opening a company is generally the very beginning. After all, this is the stage when employees must be hired, equipment and facilities must be found, and raw materials must be acquired. All of this has to happen before any revenue comes in, and it can take time before the incoming revenue can even begin to offset expenses.
Leasing equipment can be an excellent way for a business startup to get what it needs to begin operations without having to give up so much of its working capital that it does not have enough left to act as a cushion while it is becoming established. It can be the answer for many business people who want to start their own company but are afraid that they can not get the amount of cash that will be required in order to do so successfully.