If your team members regularly need to access hard-to-reach areas, you most likely need aerial lift equipment to help them get there. In addition to choosing the right type of equipment for your needs, one essential consideration is how you will pay for an aerial lift. Your options include paying upfront in full, leasing equipment or using financing to cover the costs. If you’re wondering if you should finance lift equipment, there are several factors to account for, such as your business’ current financial situation, its long-term goals and the potential benefits of financing lift equipment.
Aerial Lift Financing Guide
Before you decide to finance the cost of an aerial lift, it’s helpful to review your payment options and to understand what you are committing to when you choose to go the financing route.
What Is Financing?
Financing provides a business with money to do something. Debt financing refers to loans from banks or other financial institutions. Typically, you must pay back the money received through debt financing, usually on an agreed-upon schedule and with interest. Instead of needing to have enough cash to pay the entire purchase price of a piece of equipment right away, using financing allows a business to spread payments out over a year or longer.
Leasing vs. Financing
Another option for business owners who do not want to pay the full price upfront is to lease aerial lift equipment. Leasing equipment is notably different from financing it, although people occasionally confuse the two. One feature leasing and financing have in common is that both options typically require a business to make monthly payments, and the payment schedule is usually for a set amount of time, such as three or five years.
A notable difference between the two is what happens to the equipment at the end of the lease or financing period. When your business leases equipment, the company is not purchasing it. Once the lease term is over, you have the option of extending the lease or returning the equipment. Some businesses like the idea of leasing because doing so allows them to upgrade their lift equipment regularly. In contrast, once you’ve made the final payment on financed equipment, your business owns it outright and gets to keep it or sell it.
Ownership vs. Rental
Should your business lease or buy aerial lift equipment? There are pros and cons to each option. When you rent equipment, you aren’t committing to it. You can rent the equipment for as long as you need it, then return it to the leasing company. If your aerial lift needs change regularly or if you don’t have the space to store equipment when it’s not in use, leasing can make sense.
On the other hand, purchasing equipment can be your best bet if you know you’ll need to use a particular type of lift frequently and if you have room to store it.
Can Financing Lift Equipment Help Meet Your Current Needs?
Another thing to consider when it comes to aerial lift financing is how well the loan will work with your current needs and your company’s ongoing financial situation. It’s a good idea to take a close look at your company’s finances and at the terms of the loan before deciding to move forward.
Monthly Budget
Before you decide to finance equipment, your business must have a monthly budget. Your budget should outline the amount of income your business brings in monthly, or anticipates bringing in, and what its expenses are. Depending on your situation, you might have to make adjustments or cut specific expenses to afford the monthly payment on financed equipment.
Balance Sheet — Assets and Liquidity
Another thing to look at when evaluating whether financing will work with your current situation is your balance sheet. Your company’s balance sheet should detail your total assets, including any liabilities and equity. Taking on additional financing will add to your debt, which can affect your business’ overall liquidity.
Flexibility of Terms
It’s also a smart idea to look at the terms of the loan itself and to evaluate how those terms will help you meet your business’ current needs or if the terms will interfere with your ability to operate as usual. Your business’ current status, including its credit history, will affect the type of terms a financing company can offer you. If your business has a history of poor credit or limited credit history, it might not get the best terms. Your interest rate might be high compared to the one offered to a business with excellent credit, for example. The size of your down payment can affect the terms a financing company can offer you.
How Does Financing Lift Equipment Fit Into Your Company’s Goals?
Along with looking at where your company stands today, it’s worthwhile to consider where your business is heading in the future when deciding to finance equipment or not. Some business goals to consider include the following.
- Future business trajectory: Do you see your company using one particular type of lift frequently and for a long time? What are your plans and goals for your company? For example, where do you see your business in five years?
- Prospective ventures: Will owning specific types of aerial lift equipment help you gain new clients or land new projects in the future? How will owning certain pieces of equipment affect your business’ overall prospects?
- Usage in the long run: Does it make sense to own a particular lift, or do you envision your company needing to use different types of equipment for various projects? If you currently work mostly indoors, but want to start taking on outdoor projects in the future, will you be able to use the same equipment, or will you need to purchase additional lifts?
Benefits of Financing
Often, companies that decide to finance purchases do so because borrowing money increases their liquidity. Here’s what you need to know about the benefits of financing aerial lift equipment.
- Long-term viability: Financing, rather than paying for the equipment in full, upfront, can help boost your business’ viability in the long run. While you do need to make monthly payments on the loan, you aren’t sinking a large sum of money into a purchase right away. If your company faces challenges or a sudden downturn, you’ll still have some cash reserves and assets to fall back on, allowing you to continue to operate.
- Less expensive than renting: Over time, financing can be cheaper than renting. Once you have paid off the loan, you own the equipment and don’t have to keep paying for it. You will be responsible for upkeep and maintenance costs, though.
- On-hand convenience of ownership: When you own your equipment, it’s there when you need it. If a client calls you up out of the blue and asks you to fix something ASAP, you don’t have to scramble to find a rental, as the lift is right there.
- Retain liquidity: Even if your business can afford to pay in full for a lift, financing the purchase can be a smart move, as it lets you keep liquid assets on hand. If needed, you can use the cash to cover the cost of an emergency or use it to keep your company afloat and salaries paid in a downturn.
Contact Access Lift Equipment to Learn More About Our Financing Options
Access Lift Equipment has the lift equipment your business needs, from boom lifts to telehandlers. We also offer financing to help your business pay for new equipment. We offer fixed rates and flexible terms, including the option of financing 100% of the purchase price. Contact us today to learn more about our financing options and to see how we can help you purchase your next scissor lift, boom lift or telehandler.