There are different financing options available to farm business when needing to make necessary purchase of equipment. There is the loan option, making payment over a certain period of time with an interest rate determined by that particular lender. As well as the lease option, for some business it may be easier to obtain a lender willing to do a lease, at the end of the lease the business will have the option to buy. Which ever financing choice is right for your business there are lenders available to assist you with making your farm equipment purchases.
Types of Equipment Financing
Loan
As a farm business searching for an equipment loan there are many options available to you. It is important to look for the best interest rate and payment schedule offered to your business, do not settle for the loan offered to you by the company that is selling the farm equipment. There are many Lenders offering equipment financing services for your farm business, don’t stop at the first one.
Leasing
If you are not ready to buy, leasing equipment for your farm business is an excellent choice. There are many lenders available to cover the cost of the equipment and lease it out to you at a lower cost than purchasing it. In the United States almost 6 Billion dollars is spent on leasing agricultural equipment each year according to to industry research.
Many businesses lease rather than buy farm equipment because of the many advantages it has such as;
- Tax deductions
- Write-offs
- Balance sheet management
- Flexibility in price and payment schedule
- Customized solutions, certain mechanical problems are covered when under lease
- Easy upgrades
- Flexible end of term options – to buy or not to buy
- Fast processing
- More money in ones pocket
Although when financing farm equipment with a loan you have total ownership of the property when the loan is paid in full. When leasing you only have the option to by at the end of the lease, requiring a large amount as a pay off.
The right choice for you business
Which ever from of financing is the right choice for your business, loan or lease it is important to find the right rate so there is more money in your pocket in the long run. Regardless to the size of the loan or lease you need there is always a lender available to help you make that purchase.