Equipment leasing is a powerful financial tool when you understand the situations where it has clear advantages over a loan or cash purchase. Understanding those scenarios is an important step to effectively managing a small company’s growth. What you might not know is that there are also a few universal benefits to leasing that make some companies opt for it just to streamline operations.

1. You Can Upgrade Easily

If you lease equipment, the financing company that actually owns the machine handles delivery and removal. That saves labor because you no longer need to market or scrap used equipment, but it also means you can control your upgrades without any additional costs. Lease terms are negotiable, so you can set yours to end when you plan to upgrade and then simply lease the new model. Your financing company takes away the old machine and leaves you the upgrade, and your only extra cost is the difference in the monthly lease between the older model and the new one, if there is any.

2. It Lowers Your Tax Overhead

Many leases are close to the same cost as an equipment financing loan, so they take the same bite out of your profits. The difference is that a lease is a flat cost of doing business. As a service fee you pay to access the equipment, it falls into the same category of business expenses that other baseline costs of doing business fit into, like inventory costs.

3. There Is a Way To Finance a Purchase Without a Loan

Equipment leasing offers you the opportunity to buy equipment even when you can’t finance it for one reason or another. This is a powerful tool when you consider the tax benefits of leasing. The baseline cost of the lease is a little higher if you ask for a lease-to-own clause, but the fee for keeping the equipment at the end of the lease is nominal because the cost of the machine is recouped over the course of the lease’s lifetime.

That can be better than a loan if you do not know whether you will need to upgrade at the end of a lease, because it does not commit you to buy but it does make sure you have the option. There are a lot of reasons why you might want to finance an equipment purchase without adding a loan to your credit report, too. For more information, look at equipment leasing options near you.