Equipment Financing During a Recession

By | March 4, 2008

update your equipment Whether you personally find it to be true or not, it would appear that the general perception of the media is that the country is teetering on recession. You almost can’t turn on the news without hearing the dreaded “R” word (however, to soften the blow and keep people watching this is almost always offset by the nice R word, rebate- but that’s for another post.)

Regardless, it would appear we are headed for an economic slowdown. And, in this lease guy’s mind, that’s prime time to finance new equipment. Allow me to explain.

If you talk to anyone skilled in marketing and growing a business, they’ll tell you that the businesses who are most likely to survive a recession are the ones that invest in themselves and remain competitive during leaner times. With fewer dollars being spent by consumers, a business has to do everything it can to get their share and ride out the harder times. This can take on several meanings:

1) Increase Advertising– Most knowledgeable business analysts recommend you actually increase advertising during a slowdown.

2) Expand Services– The more services you can offer, the better off you are.

3) Update your equipment– New equipment almost always means more efficiency and better service, causing customers to choose you.

Just like how anyone can be an investing genius during a bull market, almost any business can survive during boom times, whether they invest in themselves or not.

But if lean times come, and you pull into your shell like a turtle, it’s very likely you will actually regress and lose market share. In fact, it’s almost certain this will happen, as competitors KNOW most of their competition is standing still and hoping for things to get better. Being stagnate in business is never good, but it’s especially lethal during harder times.

Equipment financing makes a lot of sense here, because you can get new equipment, and spread out the payments. In other words, you can reap the benefits of new equipment NOW, when you need those benefits the most, yet maintain a healthy cash reserve.

As a plus, most equipment financing companies (unlike banks) are willing to help with a myriad of equipment finance and equipment lease plans, with very competitive rates (as another bonus, the fed usually holds rates in check to try and spur the economy.)

The bottom line is this: if your business is relatively sound, there is almost no downside to financing equipment during a slow economy- in fact, it’s one of the smartest ways to grow your business.