I talk about this every year, because I get really excited about it. We’re in that time of year where it’s actually profitable to finance equipment and take the Section 179 Deduction. Here’s what I mean:

You buy equipment and finance it with us. Let’s say it’s $50k. 

You take the full $50k as a Section 179 Deduction.

At a 35% tax rate, that $50k deduction translates into $17,500 saved on your taxes. These are actual dollars that stay in your account instead of going to the IRS. In other words, if you *didn’t* buy the equipment, you’d be paying the IRS $17,500 more.

So ok, you have an extra $17,500 in your account. And since you financed the equipment, you’re only making a payment or two for the rest of 2020. Let’s say those two payments total $2,400. If we subtract that from the $17,500, we get $15,100.

So the bottom line is this: in 2020, you A) got a new (or new to you) piece of equipment you needed, and B) have an extra $15k in your bank account for doing so. 

All of a sudden, 2020 is looking better and better, huh?

You can look at Section 179 a few ways. Had you paid cash for the equipment, you’ll still get the $17,500, but you laid out the full $50k. You can look at the $17,500 as a discount (meaning you really only paid $32,500 for the equipment).  

But in my example here, by financing the equipment, you actually have $15k MORE in your bank account than if you did nothing. And you know what? That $15k will probably cover all of next year’s payments too. And, of course, in all this time of the payments being covered, you are using the equipment to grow your business. 

When finance guys talk about “leverage”, they typically mean things like this.

So yes, you too can end 2020 on a great note. Get something you need. Finance it. Then take that sweet Section 179 Deduction (you can deduct up to $1,040,000 for 2020 – that’s a million, forty thousand.) Just make sure you have the equipment installed and in service by midnight, 12/31/2020.

Happy shopping!  

Or is it? 

Because right now, in July 2020, if you’re still doing business and surviving… well, there *is* some clarity in that. The big “shutdown” bomb went off this past spring, and you survived. You crawled out, dusted yourself off, and said “ok, what do we have to work with?” And whatever the answer is for you, you’re working with it. 

In other words, if you’re still here, and the numbers are black (or close to black), then you should feel reasonably comfortable that you are not only going to survive, but you are probably going to eventually thrive. Will things look different from a year ago? Absolutely – you may have a smaller workforce, it may be partially (or fully) at home, and you may have lost some customers (but perhaps gained others, maybe from places you never expected.)  

I’ve had conversations with plenty of small and medium businesses the past few months. Some were affected greatly. Some had an initial dip, then came back. Some even had unexpected surges. But the big takeaway I’ve had as the summer takes hold is businesses are still financing equipment. Like everyone else, we lost some customers, but gained others. 

Of course, certain industries got hammered (restaurants, bars, gyms, indoor mall retail stores), but others have really risen. Home exercise equipment. Bikes. Cleaning supplies and tools. Lots of desktop computers for home offices. Etc. 

But those are extremes that make the news. The truth is, most companies are somewhere in the middle. And where you are today should give you a little clarity on where you will be tomorrow. The businesses who survived the initial hit (and there are millions of you) are starting to recognize their resiliency. This is a powerful feeling, because it gives a little clarity in an unclear time. 

In the end, if you are “making it” NOW, making it tomorrow probably isn’t going to be an issue.