The USA small business administration provides useful information about how to buy cheap equipment government surplus for small business so that, you can decide which equipment and assets are good for running your small business successfully and also how you can pay for them.
Find and Buy cheap equipment government surplus easily through SBA
There are three main categories of assets in which you can divide them:
- Tangible assets– Tangible assets are those assets that lose value with time such as building, equipment and vehicles but you need them for regular business activities. Tangible assets are counted on balance sheets as they can be assets such as property or equipment.
- Intangible assets– These are the assets that have no physical presence such as your brand name, your business’s reputation or your extensive business network and relations. Although, these assets cannot be listed on a balance sheet but still they add a significant value to your small business.
- Intellectual property– These are the assets that include logos, trademarks, software, patents, company website and are often protected by copyrights.
You can either choose to lease or buy the equipmentOnce you have identified and selected which equipment you need then you can acquire them through lease or you can buy them also. Let’s understand the difference between leasing and buying the equipment: Lease: If your chosen equipment or property is expensive and doesn’t fit your budget then leasing is always a good choice as it is less expensive than buying because you need less cash and don’t need to get a loan with a high interest rate. If your business needs a commercial space then it can also be leased easily with much less cash in hand.
- Needs less cash compared to buying
- Under a Short-term lease option you can test the commercial space or equipments whether they suit your requirements or not
- No interest on monthly payments
- Maintenance of the equipments or the commercial space can also be included in the monthly lease amount by negotiating with the owner
- It maybe 100% tax deductible
There are several factors that you should consider before leasing, short-term lease could cost you more every month while long-term lease may cost you less but the downside is that the total cost of ownership will be higher. Also, check for the terms and conditions and are there any penalties for terminating the lease early.
Choose to Buy cheap equipment government surplus or lease equipments:
Buying can be a good option for you if you are considering owning the equipment in long-term and if you have enough cash in hand but you have to bear the maintenance costs, tax and risks. Although, you can sell it off later for cash.
- The lifetime cost is lesser than leasing
- The assets are shown on your balance sheet
- You can sell the equipments anytime when you don’t them anymore
The downsides of buying the equipments are:
- You are liable for maintenance, risks and taxes involved
- You need to spend a lot more initially compared to leasing
- You may have to lend money from the bank to cover the cost of buying which generally have high interest rates
Should you buy cheap equipment government surplus with cash or credit?
It completely depends on your circumstances and your financial position. If you have enough cash to cover up the costs of buying the equipment as well as to cover up operational expenses then you don’t have to consider lending from the bank.
In case you have cash which can only cover up your buying costs then getting SBA loancan be good option to cover up your operating expenses. Getting a loan through SBA is simple and easy and they also guarantee loans for the small businesses.
The only downside of getting a loan is that it has higher fee and interest rates and some loans do have pre-payment penalties. Getting in touch with SBA for funding can be a good choice as they have lenders that specifically lend to the small business owners.