Fletch always has his ears open to equipment financing talk. And almost everywhere I go, be it the supermarket, the ballgame, or even to get a blood test, I more often than not come across an equipment financing “issue”. I guess my ears are simply tuned to it.
Case in point: Last month, I went for my annual checkup. And I’m happy to report that I am as healthy as a horse (I just hope the horse I’m being compared to is healthy – I guess I’m saying I don’t “get” the reference). But the more interesting part (to me, anyway) was the “lab equipment financing” conversation I overheard when I got my blood test at the other end of the medical facility I use.
It seems the lab needed a new centrifuge (a machine that spins and separates blood into its core components), but the bank was balking. Part of the problem was the medical facility already had a loan, and the bank didn’t want to add to it. Secondly, the issue was the machine was not directly tied to revenue – at least in the bank’s eyes.
I can’t help myself – I politely interjected, a business card was exchanged, and a new centrifuge was financed within the week. Win / win all around.
But it led me to investigate the larger concern – financing lab equipment is very relevant, for the very reason the bank gave for NOT financing it – and that is it’s usually not directly tied to immediate revenue.
What I mean is this: when a piece of equipment isn’t a direct revenue producer, it makes much more sense to use financing. Lab equipment, whether used in a medical lab or a scientific one, generally falls under this umbrella. Centrifuges, reactors, evaporators, high end microscopes, and much more… these are all vital components to any lab, but their tie to revenue is generally indirect (their revenue impact could be substantial in the long run, of course – think of a new drug or energy source being developed – but it’s still indirect nonetheless).
Financing lab equipment allows a company, medical facility, a lab, or even a university to spread the payments out over a longer term, lessening the bottom line impact of paying cash for a machine that might not “break even” for years. Plus, when you use an equipment financing company to finance or lease lab equipment, they fully understand that you need this equipment to operate more effectively as a whole, and aren’t as concerned about the machine’s immediate bottom line impact. In other words, an equipment financing company tends to look at the bigger picture (just like a lab does – you could say we’re a lab for cash flow!)
So yes, financing lab equipment matters, whether you’re exploring new energy solutions, developing a new drug, or making sure Fletch is healthy as… can be!
Section 179 Deductions
January 2017 We've made it to the 1st QTR of 2017 - and time once again to claim your Section 179 Write-Off for this 2017 tax year!
If you want that new piece of equipment or the latest software to fire up your business - don't hesitate to contact me and learn about Section 179 Qualified Financing!!