Equipment Leasing Companies
Best Equipment Leasing Companies
So what do you do when you need new gear for your photography/video production business, but cash is tight? You might want to consider using the services of an equipment leasing company to get the gear you need. Equipment leasing is just one form of business financing a company can use to acquire new equipment and grow their operation. Unfortunately, many banks and other lenders just don’t understand the specific needs of the cinema/photography community. After all, how many bankers do you know that would know what a RED WEAPON MONSTRO is? Go ahead, walk into a bank and ask someone… chances are you’ll just get a puzzled look and be asked if you need to open another checking account.
This is where the best equipment leasing companies come into play. An equipment leasing company is a specialized lender which typically caters to the unique needs of a given industry. These companies have a great understanding of various industries and the equipment these business owners need to make money. The collateral is the equipment itself, and the rates are MUCH better than high-rate credit cards you might be used to using for smaller equipment purchases.
Equipment Leasing Terms
Equipment leasing terms can vary from company to company, and depend heavily on the credit strength of the company obtaining the financing. Freelancers and self-employed creative professionals are considered a business as long as they generate 1099 income and report it on their tax return (Schedule C- business income). Cameramen, directors, producers and other people that might be paid W2 wages from a studio can also qualify for business equipment leasing options. Generally, if you need a piece of equipment like a camera to make money and have been in business a few years, you can qualify for financing. Typically a leasing company will collect the first monthly payment in advance, along with a nominal documentation/admin fee. Terms for financing are often 36, 48 or 60-months, which allows the camera gear to pay for itself. Cinema gear with a longer useful life, like lenses, might justify the longer 5-year term. If you’re financing a camera on the other hand, you may want to stick to a shorter term so you can upgrade sooner as technology changes.
Equipment Leasing Vs Equipment Financing
Equipment leasing is a form of equipment financing. Under a lease, you are making fixed monthly payments, and at the end of the term you can purchase the equipment for the amount of your end-option. An end-option might be $1, 10% of the equipment cost, or the fair market value (FMV) of the equipment at the end of the term. Prefer a less complicated approach? Then you should ask your equipment leasing company to document your loan on an Equipment Finance Agreement (EFA). This straight forward financing document doesn’t contain end-options. After the last payment is made, the gear is yours free and clear. You can continue using it, trade it in for new equipment (which can also be financed), or sell it. Leases are generally preferred by larger companies due to the extra tax advantages, while the majority of people in the photo/video industry opt for equipment finance agreements.
Whatever option you choose, equipment leasing and financing options provide a valuable opportunity to scale your business and take on additional jobs that require higher end gear. If you are tired of renting lenses, digital cinema cameras, and lighting gear for each shoot, look at equipment leasing and financing options which help keep your hard earned money in your pocket!