Equipment financing pays for a specific item, such as a commercial oven, a vehicle lift, an HVAC service van or dental imaging, and the item usually secures the agreement. Under a loan the business owns the equipment; under a lease it pays for the use of equipment the lessor owns. This page covers the lease-or-buy decision, used equipment and what partners review.
At a glance
- Construction employers
159 employer locations countywide (CBP 2023)
- Full-service restaurant employers
69 employer locations countywide (CBP 2023)
- Physician office employers
69 employer locations countywide (CBP 2023)
- Auto repair employers
50 employer locations countywide (CBP 2023)
How Does Equipment Financing Work? What It Means in Florence, AL
The business brings a quote for the equipment. A partner reviews the quote, the expected useful life of the item and the business's ability to make the payments, then offers a loan or lease for some or all of the price. Because the equipment secures the agreement, the partner may hold a lien on it until the balance is paid. Some agreements require the business to insure the equipment and keep it in working order.
Equipment needs differ by trade. Lauderdale County, AL had 159 construction employers, 69 full-service restaurant employers, 69 physician offices and 50 auto repair employers in 2023 (U.S. Census Bureau, County Business Patterns 2023). A kitchen line, a lift and an ultrasound machine all have different lives and resale markets, and partners read them differently.
Equipment Financing vs Leasing Across Lauderdale County, AL
| Equipment loan | Equipment lease | |
|---|---|---|
| Who owns it | The business, from the start | The lessor, during the lease |
| At the end | Paid off and kept | At lease end: hand it back, renew, or buy it at the price set in the lease |
| Up front | Possibly a down payment | Possibly first and last payments |
| Compare by | Total of all payments | Total of payments plus any purchase price |
Is It Better to Lease or Buy Equipment for Business? How Lauderdale County, AL Owners Approach It
No general answer favors either one. Buying fits equipment the business will use for most of its life and wants to own outright. Leasing fits equipment that dates fast, such as computers or some diagnostic tools, or that the business may want to replace on a set cycle. Tax treatment differs between the two; ask your accountant how each would be handled for your business.
Illustration only, invented figures: an $85,000 machine financed at 9.5% a year over 60 months has a payment of about $1,785 and a total of about $107,109. A lease on the same machine at $1,600 a month for 60 months totals $96,000, and buying it at the end for $8,500 brings the lease total to $104,500. On these invented numbers the loan costs about $-2,609 less in total, but the lease asks for nothing up front.
Used Equipment Financing for Florence, AL Owners
Used equipment can be financed, though partners read it more carefully. They want the age, hours or mileage, the condition, and who is selling it: a dealer, an auction or a private seller. A private sale may need a bill of sale and proof that no one else holds a lien. The financing term on a used item tends to be matched to the life it has left.
Business Loan to Buy Equipment: What Partners Review in Florence, AL
- A written quote or invoice with make, model and price
- For used items: year, hours or miles, and the seller's details
- Recent bank statements
- Time in business and annual revenue
- Any existing equipment loans or leases and their payments
Equipment Loan for Business, Explained for Lauderdale County, AL
The equipment itself shapes the request. A restaurant in Florence, AL pricing a hood and fryer line, a contractor in Lauderdale County, AL pricing a skid steer, and a medical practice pricing exam room equipment will each be asked about different things. The article on buying a restaurant in the Shoals and the article on buying a gas station in Florence, AL show equipment as part of a larger purchase.
Equipment Loan for Small Business in Florence, AL
When equipment is part of a bigger project, the rest of the cost may sit better elsewhere: build-out on a term loan, opening wages on working capital. All six options are on the comparison page, with local counts on the Florence, AL page and industry notes.
Equipment on the Alabama Business Personal Property Return
Equipment a business owns or leases may need to be listed on the business personal property return filed with the county. The rules for financed and leased items, and who reports them, are covered in the guide below; confirm the details with the Lauderdale County, AL office that handles the return.
Read the Alabama business personal property tax return guide for what the return lists and how financed equipment appears on it.
By Coastspring Funding Group · Updated