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Why is Medical Equipment Leasing Worth $130 Billion?

The American healthcare industry is a large part of our economy, yet it also faces financial challenges. With the evergrowing competition in the space, hospitals and local clinics need to keep their costly equipment up-to-date. That is why over $130 billion worth of medical equipment is being leased each year.

Why lease medical equipment?

Transportation equipment, imaging, and diagnostics machines are costly and have limited lifespan. Leasing can help in managing cash flow and maintaining operational flexibility.

Leasing provides the right to use medical devices over a period of time, typically three to five years, without the burden of ownership. It offers lower monthly payments, low to zero upfront costs, and flexible options at the end of the term.

What are the benefits of leasing medical equipment?

Efficient capital management

Lower operational costs and less money tied up in upfront equipment purchases enable hospitals and clinics to invest their capital elsewhere and retain positive cash flow.

Operational flexibility

At the end of your term, you can return or upgrade the equipment, keep leasing, or purchase it at face value. You can choose the most suitable option.

Procurement relief

Leasing companies typically fund deals in 2 to 5 days and require no down payment. Banks tend to take a more conservative approach, requiring 2-3 weeks for credit review and a 20% down payment.

Getting new (or used) equipment

In light of the recent pandemic, healthcare organizations have been relying on fast and easy medical equipment leasing to support the increasing demand for their services.

At Alliance Funding Group, we feel the responsibility to support our doctors and hospitals with the affordable Healthcare Equipment Leasing Program.

Connect with an Account Manager today to learn about custom-tailored leasing options for your organization.

About Alliance Funding Group
Alliance Funding Group has been financing small, medium, and enterprise-sized businesses throughout the United States since 1998. Since inception, we have financed over $2B in equipment leases and loans to thousands of customers in small and mid-market arenas throughout the US.

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Buying Equipment from a Private-Party

Buying equipment in a private-party sale can offer a cost-effective way to get what you require to run your business. You can save money on dealer fees, delivery charges and, most importantly, the margin vendors put on top of their equipment price.

In this article, we explain what challenges you may run into and how to pay for your privately purchased equipment.

What is a private-party sale?

A private-party sale is a transaction in which the seller is an individual, not a dealer or vendor. This can typically occur at your local yard sale or on online platforms such as eBay and Facebook Market. Businesses often take advantage of private-party sales to acquire commercial equipment.

What precautions to take?

There are certain risks associated with buying equipment from an individual. While dealers may offer warranties on your purchase, a private-party sale is final. That means it is always better to take some precautions before accepting a pricey piece of equipment “as is.”

First, check the Title. Make sure the equipment belongs to the seller, is not stolen, and fully paid off.

Ask how they purchased it. A legitimate seller should be able to show you the Bill of Sale from the time they bought that piece of equipment.

Check for loans and liens. Ask the seller to verify that there are no outstanding loans or liens with their state’s UCC.

Do not pay cash. Use a payment method that provides evidence of the sale such as check, ACH payment, or a wire transfer.

Inspect the equipment. Ensure your potential purchase’s mechanical condition is sound. Private sellers typically sell the equipment they have used but do not need anymore. They may try to hide some malfunctions to sell faster.

Can I finance equipment purchased in a private sale?

Even when you find a great deal, sometimes, large equipment purchases can be hard on your cash flow. There are two easy options to avoid a financial hit and pay for the equipment over time.

Finance right away

Once you have found some options, you can ask a lender to pre-qualify you. The lender will then quote the maximum amount available to you. After you find the right piece of equipment and agree on the price, you can call the lender to finalize the purchase.

Finance after purchase

Let’s say you did not want to miss a good deal and used your company’s cash reserves to pay for equipment. Now you want to restore the cash balance as quickly as possible. This is called “sale-leaseback”. A financial product that allows you to get back the money you have paid and only make affordable monthly payments.

Who can finance a private-party sale?

At Alliance Funding Group, we have the flexibility to offer a large variety of equipment financing structures.

Talk to our Account Manager today to get pre-qualified for an equipment purchase without affecting your credit.

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Is Interest Expense Tax-Deductible?

Business loans are powerful tools that allow companies to improve their services, acquire better equipment, and sustain through slow periods. Simply put, a loan can be used to cover a large variety of expenses.

Making sure all your expenses are accounted for during the tax season is crucial to compliance and retaining cash in your business. This article will focus on working capital and how you can benefit from interest tax deductions.

At AFG, we use a short-term loan structure, which allows you to get the most benefit when you file your taxes!

Need to take out a working capital loan? Apply now and get up to $150,000 within 24 hours!

How to make sure you are eligible for a tax write-off?

Before understanding deductions, you should make sure that your type of loan and use of the money would qualify for a write-off. Here are the general requirements:

  • You have to borrow from a legitimate business lender

Your loan has to come from a bank or a business lender. It may sound self-evident, but many startup owners tend to borrow from family and friends. Since they are not an accredited lender, such loan would not be eligible for a tax write-off.

As a general rule, the IRS is very suspicious of any private party funding. That is because personal agreements may not be defined as “loans” in the legal sense of that word. Therefore, only a loan that has a clear payment schedule and makes you legally liable to repay will qualify.

  • You must spend the money

When you take out a short-term working capital loan, the requested amount of money is wired to your account. Most intent to use it, yet you have the option to keep in your bank account until you pay it back.

In order to be eligible for the deduction, you have to spend the money.

Doing the math

As mentioned above, a working capital loan is a short-term product. That means that you will likely expend all the interest in the same year or split between two years.

Different working capital products use either a standard annual percentage rate (APR) or a factor rate, depending on terms of your contract. Therefore, the amount of interest paid will be different for every situation. 

What’s next?

Alliance Funding Group is compliant with the tax laws, and all our products allow you to benefit from tax write-offs every single year.

With our Unsecured Working Capital Program, it is easy to know your exact interest amount from the get-go! We use simple factors and provide you with a fixed cost of capital so that you can make an educated business decision.

Get a free quote with no effect on your credit today and benefit from the tax write-offs this year!

Note: This article should not be taken as tax advice. AFG recommends that you consult your accountant or tax advisor.

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Working Capital: What it is and why is it important?

Working capital — the money used to cover daily spending. Keeping track of the assets that can be put toward immediate expenses is essential for any successful business.

Maintaining steady and consistent cash flow is one key to a less stressful life as an entrepreneur. For some, cutting back unnecessary expenses may be sufficient to sustain a healthy bank balance and do business worry-free most of the time.

However, for many small and medium-sized businesses, there are various reasons to raise additional working capital either on a short-term or continuous basis. This article will describe different types of working capital loans, explain when you should consider taking one out, and what options are available.

Need to take out a working capital loan? Apply now and get up to $150,000 within 24 hours!

What exactly is Working Capital?

Working capital is the difference between your current assets and current liabilities.

Current Assets represent the total worth of your company’s cash, accounts receivable, inventory, prepaid expenses, and other short-term assets that will turn into cash by the end of the fiscal year. 

Current Liabilities sum up the debts and accounts payable that must be paid within the next 12 months.

Measuring working capital helps you understand how much money there would be left after you pay all the bills.

How much Working Capital do you need?

Many companies set Current Ratio goals to help stay on track. If you have a benchmark that you try to maintain, figuring out the amount needed should be easy! Here is the formula:

Current Ratio = Current Assets ÷ Current Liabilities

As a rule of thumb, you should always stay at or above 1. That means that your business has enough money to at least cover what it owes.

Most would advise, however, that your business should aim at the ratio between 1.2 and 2.0. Ultimately, the more of extra capital you have at hand, the more investments, marketing, and expansion money is available for you to grow.

Want to learn more about working capital? Talk to a knowledgable manager at Alliance Funding Group now!

When Can Additional Working Capital Come in Handy?

Inconsistent cash flow

A big job opportunity came your way, but the customer wants to pay at the end of the project? Your clients take too long to pay their invoices? Situations like that happen all the time and are standard in some industries. Yet, being short on money may disrupt your perfect pay history or limit you on marketing and payroll expenses. A working capital loan helps you cover all the costs to stay on track.

Seasonal sales fluctuations

Fixed expenses may become a struggle during the slow season, while variable costs may cause trouble right before it picks up again. A working capital loan provides funds for you to stay afloat during the offseason and stock up before holidays.

Growing your business

Stagnation is no fun. Companies have to spend a lot of money on current operations. Expansion projects may drain the cash reserves and put your business at risk. Proper planning and budgeting is undoubtedly one way to avoid going upside down. A working capital loan can help you move forward with ambitious projects faster and maintain positive cash flow.

Additionally, some extra working capital may come in useful when training new staff, purchasing equipment, and ultimately taking on projects that will pay off in the future.

Cash cushion

If hearing bad news from the bookkeeper is your least favorite thing, having quick access to cash may help prevent unnecessary problems. Working capital programs allow your business to easily afford emergency spending and keep you out of trouble.

Need more help with understanding your options? Talk to an experienced account manager today, no pressure!

Types of Working Capital Loans

Installment (Term) Loans are issued in one lump sum. You are then expected to pay it back in equal regular installments every month or week.

Installment loans work great for established businesses that are looking for long-term financing.

SBA Loans

SBA Loans are offered by the Small Business Administration, an organization that assists companies in raising money through government-supported loans. 7(a) loans — the most popular type — allow to borrow up to $5 million and can be used for many everyday business purposes. The government may partially guarantee a loan if your business does not have enough collateral to pledge.

That said, it may be much harder to qualify for government-backed loans compared to banks and private lenders.

Lines of Credit

Lines of Credit provide access to up to a certain amount of money. You can draw what you need at any time. Mostly, such programs offer revolving lines of credit, which means you can use the funds repeatedly after repaying the debt. Like a credit card.

A revolving working capital line of credit may be beneficial if you have not decided on the amount or need to have the ability to draw money quickly in case of an emergency.

Tip: Keep an open line of credit under your company and pay timely to build an outstanding business credit history.

Invoice Financing

Invoice Financing (Factoring) is a product that helps you cover receivables. Ultimately, when you use invoice factoring, a lender will buy the outstanding invoices for a fixed price and then collect on those invoices as a repayment.

Invoice factoring helps companies leverage the expected influx of cash before it is received.

Short-Term Loans

Short-Term Loans are similar to installment loans with two main differences. First, the terms typically do not go further out than 18 months. Second, you pay a fixed fee instead of an interest rate.

A short-term business loan is an excellent source of additional working capital because most of the needs that business owners may want to cover are also short-term.

How Do I Know I am Ready for a Working Capital Loan?

  • Have you explored the available options?
  • Do you have a plan and budget for your upcoming spending or investment?
  • Will the loan make your business situation better, once it is used and paid off?

What’s next?

It just so happens that Alliance Funding Group offers #1 unsecured working program in the United States.

Consider this:

  • Zero risks for your business assets
  • Unbeatable rates
  • Renewal discounts
  • No prepayment penalty

Get a free quote with no effect on your credit today, get funded within 24 hours!