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Many middle-market companies seeking to acquire or upgrade equipment, machinery, vehicles, and technology choose to finance their purchases. This strategic decision allows them to obtain assets without the immediate burden of a large capital expenditure.
In this Ameris Bank Equipment Financing blog article, we discuss 7 key benefits of equipment financing for middle-market companies. If you are a Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO), or someone responsible for capital equipment investments at a middle-market firm, you’ll find this information helpful..
Preserves cash flow.
The cost of acquiring capital equipment can be high, particularly if you’re purchasing multiple assets. The cost can vary based on several factors, including the type of equipment, whether it is new or used, the features and add-ons included, and its size and specifications. Additionally, the total cost of ownership (TCO) can be influenced by other factors such as taxes, shipping and delivery fees, installation charges, and training costs.
If your middle-market company finances equipment, a large upfront payment is not required. By spreading the cost over time, you can maintain your company’s cash flow and ensure the working capital needed to invest in other important areas of your operations.
Helps maintain business liquidity.
As mentioned above, equipment financing may help your middle-market company maintain cash flow and meet its financial obligations. By preserving cash flow, you might be able to enhance your company’s liquidity ratio. A strong liquidity ratio can possibly enable your business to take advantage of growth opportunities and navigate financial uncertainties as they arise.
Plus, a robust liquidity ratio may help your middle-market company appear more attractive to banks and lenders when seeking financing. This could help you secure a business loan, line of credit, or other financing on favorable terms.
Access to the Latest Technology.
Equipment financing enables your middle-market company to procure the latest technology that might otherwise be financially unattainable. This allows you to obtain state-of-the-art equipment that can improve workplace productivity, enhance employee safety, streamline operations, and minimize downtime.
In addition, leveraging the latest technology can help differentiate your middle-market company from competitors. It might enable you to respond swiftly to market changes and innovations and position your company for sustained growth.
Potential tax advantages.
Many types of capital equipment that are financed offer potential tax advantages. For example, Section 179 of the Internal Revenue Service (IRS) tax code permits companies to deduct a portion of the cost of equipment in the year it is purchased and used for business purposes. However, the equipment must qualify for the Section 179 tax deduction.
In 2026, the Section 179 deduction limit for qualifying equipment purchases is $2,560,000, and the phase-out threshold is $4,090,000.1 Ameris Bank Equipment Finance recommends that you consult a tax advisor to understand the specific implications and benefits applicable to your middle market company’s situation.
Improved budgeting.
When you finance capital equipment for your middle-market company, you will have predictable monthly payments over a specific term. Knowing exactly how much to allocate each month to your equipment purchase enables you to make informed decisions about cash flow, operational expenditures, and resource allocation.
By clearly understanding your monthly obligations, you can concentrate on other areas of your business without the uncertainty of fluctuating equipment costs.
Soft costs can be included.
The purchase price of capital equipment can increase to account for soft costs such as delivery, installation, and training. By incorporating soft costs into your equipment financing agreement, you can secure the total funding needed for the equipment and its associated expenses. This minimizes the upfront financial burden and helps ensure a smooth delivery and implementation process.
Helps accelerate growth.
Regardless of the growth objectives your middle market company is pursuing—whether it’s introducing new products and services or expanding into new markets—financing equipment might help accelerate growth. By gaining quick access to funds for essential equipment purchases, your company can possibly be better positioned to advance its strategic goals with minimal impact on cash flow.
Sources.
1 -https://www.nerdwallet.com/taxes/learn/section-179-deduction
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Ameris Bank does not endorse nor is affiliated with the companies listed in this article.