Businesses are going to borrow even more in the next few months. And equipment sellers need to be ready for it. Here’s why:

Awhile back, I discussed how businesses are still borrowing during the pandemic. The reason was in times of uncertainty, companies would rather keep their own cash in the bank, and borrow for needed equipment. 

That thought is going to get magnified this fall. For two reasons:

1. Interest Rates are as low as they’ve ever been. In fact, they almost have nowhere to go but up. So locking in a fixed rate now is definitely seen as a smart business move.  

2. The whole “uncertainty” thing with the Pandemic for fall and winter. We’re optimistic about the future, but the short term is still cloudy. That makes businesses somewhat anxious.

This has led to businesses looking at what equipment they will need in the near future, and deciding to get it now, before the winter comes. Makes sense, right?

Credit Has Never Been More Important – Are Equipment Sellers Ready? 

This is very clear to me: equipment sellers that OFFER a great financing option are going to beat those who don’t. It’s as simple as that. 

In fact, it’s my thought that companies who still won’t offer a credit option here in 2020 will go the way of those few stubborn restaurants that refused to take credit cards. How many of those are left?   

So here’s my advice to companies:

OFFER FINANCING. Whether it’s partnering with a company like Crest Capital or some other way, make sure your customer can apply for financing right at your website.

Second, if you are already offering financing (good for you!), tweak it. Get it on the homepage. If it’s already there, make it more prominent. Get it with your products. If you can, show a “as low as” monthly payment number with a button to apply (hint: that’s sales rocket fuel.) 

In other words, make it as easy as possible for prospective buyers to get financing, and don’t give them any reason to leave your website. 

The Autumn 2020 financing rush is coming. Be ready. 

Welcome to the second day of the 4^th quarter rush! If you’re a newcomer, you might be wondering why the office seems to be in overdrive. Well, it’s all part of the seasonal rhythm of business. Equipment Sellers are hustling to move inventory for a strong year-end finish. And then, there’s another reason for the excitement – the tax benefits that come with financing at this time.

Let’s get technical for a moment: Section 179 of the United States Internal Revenue Code (26 U.S.C.179) empowers businesses to deduct the cost of certain types of property from their income taxes immediately. This usually applies to tangible personal property like equipment and vehicles, but not buildings. Anything that doesn’t qualify for a section 179 deduction can still be deducted over several years through MACRS depreciation.

Let’s break this down with an example: Say you make a purchase worth $125,000.

• 1st Year Write Off: $112,000 (This is the maximum Section 179 write-off in 2007)

• Normal 1st Year Depreciation: $ 2,600 ($125,000-$112,000 = $13,000 x 20% = $2,600)*

*Depreciation calculated at 5 years = 20%

• Total 1st Year Deduction: $ 114,600 ($112,000 + $2,600 = $114,600)

• Tax Savings Assuming Rate of 35%: $ 40,110 ($114,600 x .35 = $40,110)

• 1^st Year Savings / Lowered Equipment Cost: $ 84,890 ($125,000 – $40,110 = $84,890)

Let’s translate this into real-world terms: You get to write off up to $108,000 of the equipment cost in the year you purchase it. How cool is that?

A simplified example:

Imagine you buy equipment worth $125,000.

*IRS magic happens*

You end up saving $ 40,000 on your taxes! That’s a win in our books!

Now, how do you feel about that???