For example, if I’m talking about rates or similar, I’ll stress the importance of locking financing in with fixed rates. Recently, as 2021 progressed onward and eventually gave way to 2022, I’ve mentioned inflation more than once, and have stressed that financing can be used as a hedge against rising prices. 

But it occurred to me that I’ve never really highlighted these reasons in and of themselves. I’ve always discussed them as a secondary piece to another topic, which is fine, but for now and the next few posts, I’d like to highlight some of the reasons to finance by themselves. Here are a few off the top of my head that will make an appearance over the next few weeks:

• Using Equipment Financing to take advantage of new technology.
• Using Equipment Financing to keep your own funds liquid.
• Using Equipment Financing as a hedge against inflation.
• Using Equipment Financing to keep pace with your competition.
• Using Equipment Financing to stay ahead of your competition.
• Using Equipment Financing and Section 179 (ok, I’ve done this one a lot in this blog, but I’ll still include it at the end.)

Notice that these are all fairly specific, and I’m not using a generic “use equipment financing to help your business grow”. That’s because all of these can (and will) help your business grow. 

Some of these ideas and thoughts may overlap a little as well. For example, isn’t “take advantage of new technology” somewhat similar to “stay ahead of the competition”? Yes, it is. But since the beginning mindset / reason is different, they each deserve their own post. And once I give an example or two of each, it’ll be pretty clear they are different enough.    

Stay tuned for more.

See, when there’s inflation (or even a threat of inflation), businesses get a renewed sense of urgency in all things financial. And a renewed sense of urgency is a good thing, because then things happen.

Now let me discuss this from an equipment financing sense. There are really two ways to look at it (both favorable to businesses):

The first way of looking at is in terms of “dollar worth”. In plain terms, if we have inflation, today’s dollars are worth more than tomorrow’s dollars. Make sense to you? Of course it does. So it’s logical to think that buying an item today (in the form of financing or leasing equipment), but paying for it with tomorrow’s “worth far less” dollars, is a nice proposition.

In other words, you pay for today’s equipment needs with tomorrows dollars, which are going to be worth less than they are today. So really, equipment financing (and equipment leasing) are solid hedges against inflation. And trust me – businesses know that. I personally have seen upticks in equipment finance applications every time there’s mention of inflation.

The second way to look at equipment financing as a hedge is simply in interest rates. Right now, rates are pretty low, and financing or leasing equipment is almost always done on a fixed rate basis. Hence, if you think inflation is coming (like I do), lock yourself in now for a low rate, because once inflation starts, interest rates will tick upward to control it.

Now, in all of the above, we get back to one basic premise – a little inflation will definitely spur business spending, as businesses clamor to take advantage of today’s (relatively) high-worth dollars and low interest rates. And higher business spending is good for the economy. So it’s kind of a win/win.

You know, in re-reading the above, I’m sure glad I paid attention in my college economics classes, and reserved my “goofing off” for Biology and things like that (because really, what does the inside of a frog have to do with anything?)