Equipment Rental for Your Business

Renting can save money and provide quick access what you need
By Judith Earley Restaurants need ovens, retailers need cash registers and every office space needs a functional copy machine. No matter what type of company you own, you can't do good business without the right tools to do your job well. After all, having the right equipment — whether state-of-the-art computers or just a sturdy desk on which to write — can make your business; and in the same turn, having the wrong equipment can easily break it.

Business tools can be expensive, however, especially for young start-ups. Budget-conscious companies, then, rent or lease their equipment, which can:

1. Free up cash for other expenses and investments.
2. Reduce the amount of debt on your financial statements.
3. Facilitate easier and less expensive equipment upgrades.
4. Reduce your tax burden, thanks to applicable deductions.

 

Evaluate your needs

Every hunt for equipment – rented, leased or owned – should start with an inventory of your business needs. Everything from furniture, phones and computers to forklifts, software and vehicles, can be rented. Decide what you need to own, and what might be worth borrowing.
Try: Check out Entrepreneur.com's Equipment Leasing Checklist, which will help you find the right equipment at the right price by encouraging you to ask the right questions of yourself and of your vendors.

Decide: Rent or lease?

A lease usually covers a period of time longer than a week or a month and the title transfers to you. Usually, you're also responsible for maintenance. A rental agreement, meanwhile, covers use of an item for a short time and the rental company is responsible for maintenance and breakdown.
Try: If you decide to rent rather than lease, visit the American Rental Association for a comprehensive list of equipment that can be rented, as well as stores from which you can rent it.

Find a lessor

When you rent or lease equipment, it's important to find a lessor who will treat you like a partner rather than an account. Look for a lessor who has experience with or specializes in equipment for your industry. Ask for references, too, to help you evaluate prospective leasing and rental companies.
Try: Find a reliable equipment leasing company by consulting the leasing directory at the Equipment Leasing Association's (ELA) Choose Leasing Web site, which houses a library of information on smart equipment leasing.

Choose a lease financing company

The company that will finance your lease is not typically the same as the company who will provide your rented equipment. Start with your own bank or financial services provider before soliciting other companies to broker your equipment lease.
Try: Get quotes from several lease finance companies — such as Direct Capital, Mosaic International and Sun Star Equipment Leasing — before making a decision.

Negotiate your contract

When negotiating a lease, consider the length of your lease, the amount of any upfront payments, your monthly payment amounts, return rights, early termination clauses and whether you will have the right to purchase rented equipment at the end of your lease.
Try: An equipment lease agreement will protect you in the event that something goes wrong with your equipment or lessor; download a standard agreement at FindLegalForms.com.

• Beware of interim rent, also known as stub rent, which lessors may charge between the time you accept the leased equipment and your official lease start date.
• Remember that rented equipment is usually more powerful, better built and more thoroughly tested than equivalent products you can buy.
• Bring down the cost of your lease payments by negotiating a lower purchase price for the equipment, or a lower financing rate.
• Save money on your equipment rental by excluding soft assets — such as warranties, training, installation and shipping costs — from your lease; if needed, soft assets can be negotiated at a cheaper rate independently, and if necessary, financed with a small business loan.