How Maintaining Your Equipment Saves You Money With Equipment Financing
Keeping equipment in good condition is a smart way to run your business, but did you know that it can also have benefits for equipment financing? This gives you another reason to train your employees to treat equipment well and keep it properly maintained.
Maintenance Makes Life Getting a Loan Easier for Your Business
A good reason to invest some time to maintain equipment is that it pays off in the short term and the long term. Equipment financing isn’t just paying to get access to the equipment you need. You’re also building up equity at the same time.
What happens 10 years down the road when you want to purchase a building for your business? You can turn to that heavy machinery or another piece of equipment and use it to secure a loan. What factors is the bank going to consider?
Most loans have something called a loan-to-value ratio. This means that the total amount of the loan you receive is a percentage of the item you’re using as collateral. The more your equipment is worth, the larger the loan you can get and the lower the down payment you need to make on the property.
What can help boost the value of your equipment? That’s right, regular maintenance.
Other Benefits of Equipment Maintenance
Entrepreneurs that have been running a business for a long time have probably learned this lesson already. Many parents taught their children the value of hard work and keeping possessions in good working conditions. For example, your dad may have taught you how to perform maintenance on your first car, changing the oil, keeping the tires properly inflated, and cleaning under the hood.
The same things that worked then also save you time and money as a business owner today. Equipment that is correctly maintained — ironically also involving regular oil changes — lasts longer. It costs less to operate and minimizes downtime. You’re getting the maximum bang for your buck from equipment financing.
All of these seemingly minor things add to major benefits for your company’s profits. For example, think about a construction business that has an excavator. With proper maintenance, that piece of equipment can easily last 20–30 years or more. The loan may only take 15–20 years to pay off.
That means decades of pure profit where you’re getting benefits from your equipment with virtually no costs outside of regular maintenance and minor repairs. Talk about a smart decision!