3 Major Advantages Of Working With Leased Farm EquipmentShare
Is equipment availability hampering your push for higher farm production? This is an old challenge for agricultural investors the world over. Farming equipment is expensive, and it would require significant capital to upgrade and increase your farming equipment. Fortunately, you can find a leasing partner who lets you use farming equipment for a short period with a budget you can afford. Equipment leasing has long been used in other industries and has also caught up in agriculture. So, what advantages does farming equipment leasing offer?
More Financial Flexibility
Equipment leasing places a lower demand on your working capital. Typically, the last crop provides the working capital, but sometimes the harvest works out as expected. With leasing, you pay a fraction of the down payment you would have put down for a purchase. It makes your cash flow more flexible, allowing for investment in other inputs or acreage expansion.
Monthly lease payments are also lower than loan payments. For example, you would have easier payments on a 5-year lease than paying off a 5-year loan. It is also a factor in easing your farm's cash flow.
Leasing shows a lower liability on your balance sheet than a loan. It is a plus if you need to present your financial documents to a financier or prospective investor; it makes your farm look more profitable on paper. Lease payments are business expenses. This means they are tax-deductible. Therefore, it makes a slight improvement in your margins.
Access to Latest Equipment
Have you been exploring the catalogs for the latest Farmall tractors and are wondering when you can afford one? Leasing is primarily an arrangement to make items more affordable for those who don't want to make an outright purchase.
Leasing farming equipment has an added advantage in that you can experiment with the latest technology without making a high financial commitment. Typical leases run for enough time to tell you what works and what doesn't work for your farm.
Faster Scaling Up
Farming equipment leases can give you the flexibility to scale up your farming activities. For example, if you get a crop farming contract for certain seasons, you can agree with a tractor service for a lease covering these seasons. Then, you can downscale to your previous acreage at the end of the farming contract. This ease of scaling up or down gives you higher adaptability in an erratic industry.
Are you looking for ways to optimize your farm production? Talk to an industrial equipment supplier about a farming equipment lease.