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How To Put Equipment Leasing and Small Commercial Mortgages to Work for Your Business?

Feb 27, 2008
What is the first thing that comes to a small business owner's mind when they need money to start or grow their business? More often than not, it's a bank loan. Unfortunately, it is also one of the most difficult ways to finance a small company since banks are regulated institutions and have to adhere to many rules that are difficult for small businesses to satisfy. What are the alternatives? The two options that we will look at today are equipment leasing and commercial mortgages. Both of these tools present an excellent opportunity for business owners and yet are often overlooked.

Equipment Leasing
Equipment leasing is an excellent choice for a startup or existing business especially if your business uses a significant amount of equipment to make their operations efficient. What are the examples of equipment that can be financed? Just about anything that is used for a business: landscaping equipment, auto shop equipment, telecommunication equipment, medical equipment, metalworking, bakery equipment, restaurant equipment, etc.

Why does equipment leasing present an excellent option for business owners? It is usually a quick and efficient way to obtain financing. In many cases startups can get up to $20,000 by providing an application only. Companies that have been in business for 2-3 years are looking at up to $50,000 with an application only. That means there is no need to gather paperwork and a quick and easy submission and decision. In many cases you will hear back within 24-48 hours about a decision on your lease, which means you are closer to your goal so much faster. Larger amounts are usually available with full documentation packages. Many lease programs also have special features such as 3-6 month deferrals that allow businesses time to start earning revenue with their equipment.

In addition there are many more benefits to equipment leases including potential tax savings, predictable fixed payments, and 2-7 year terms. Many people do not want to consider leasing for fear they would not own the equipment at the end of the lease. Modern lease programs offer you a variety of end of the lease options including $1 buyouts where you pay $1 at the end and the equipment is yours. Another thing that comes up - people actually want to use their cash and not borrowed funds. That might sound like a great idea, but actually it is not since debt provides a business owner with leverage to catapult them to higher growth. Debt when used correctly is an excellent instrument for growth. Cash is best used for working capital needs.

Commercial Mortgage
Commercial mortgage is another excellent financing tool for a small business. If a company owns their current location, it is a great idea to consider pulling equity out to finance business expansion, consolidate debt, remodel or open another location. For companies that do not own their locations and are paying rent, it is always a great idea to run the numbers to see if it would make more sense for them to own the property.

One thing that usually stops business from pursuing this option is the lack of small commercial mortgage options. The options that maybe available typically require large down payments and strong tax returns. These are all valid reasons unless you know a business consultant that works with small commercial loans.

Preferred Capital Alliance, Inc. has started offering small commercial mortgages this week. These are the loans specifically targeted at small business owners. The maximum loan amounts are $1.5 million and they cover such property types as office, retail, warehouse, mixed use, self-storage, multifamily, mobile home parks and more! What's even better is now a qualifying small business can acquire their business location with as little as 3% down. In addition to full document programs we also offer stated income programs that would benefit many business owners, which for one reason or another are not able to prove their income with tax returns.

In addition to acquiring property for your business, you can also refinance your existing property and/or invest into an income producing commercial property. The process is quite simple and we will walk you through each step. Just imagine in about 45 days you can own your business location or supplement your income with a commercial investment property! The possibilities are endless.

Pulling out equity from your commercial property often represents one of the cheapest options to finance your growth. Acquiring a commercial property instead of renting is also a smart decision in many cases.

All in all, there are many ways to finance companies, and bank loans are certainly not the only option. The smart thing to do is to find a reputable business finance company that can narrow down the options and help you obtain financing.
About the Author
Tiana Nelson, CMA, CFM is a Business Development Officer at Preferred Capital Alliance, Inc, a Better Business Bureau accredited business finance company that helps small- and medium-size businesses obtain financing to start and expand their operations.
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