The decision was mainly due to a poor May jobs report as well as an economic growth forecast dropping from 2.2% to 2.0%.  This is the second time this year that the FED has lowered its expectations for the growth of the US economy.

Click here to read the full article from CNN.

The next possible action for an interest rate increase is in July when the Fed meets next.

So what does this mean for businesses?  It means it’s time to take advantage of the historically low rates before they’re gone.  It is important to lock in rates now while they are still low. We’re seeing a surge in equipment financing due to the realization that the economic and financial landscape may soon be changing.  The opportune time to buy and finance equipment is now.

About TEQlease
TEQlease Capital provides equipment lease financing solutions for businesses and educational institutions in the United States. TEQlease Capital also offers equipment vendor lease finance programs across all industries. To learn more about TEQlease Capital, visit our website at www.TEQlease.com.

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According to CNBC, the economic conditions and the financial markets are prepared for a rate increase.  According to Dennis Lockhart, a voting member on the Federal Open Market Committee, the economy is on a “solid, moderate path,” warranting the Fed action.

Lockhart, who stated the economy is growing at about 2 percent, said that he expects a gradual path of rate increases once the initial hike happens.  Another factor that is likely to influence the Fed’s decision is job growth in the US.  Since the end of the recession, America has added 12 million jobs and unemployment has fallen from a peak of 10%, down to 5%.

So how is the rate increase going to affect businesses looking to purchase new equipment?  What is important to remember, is that rates are being increased, but that doesn’t mean they are going to be high.  If what Lockhart says is accurate, in that the rates will be increased on a gradual path, you still have a chance to secure a relatively low rate once the initial hike happens.   Based on this information and that equipment investments are expected to grow by over 4% next year, late December or early 2016 still make for ideal times to purchase equipment for your business.

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Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy or lease a piece of qualifying equipment, you can deduct the full price along with the normal years’ depreciation, from your gross income.  This tax incentive was created by the U.S. government in an effort to encourage businesses to buy equipment and invest in themselves.

Check out the full details of Section 179 here.

So what does this mean for businesses?  It means that with the tax incentives of Section 179 coupled with historically low interest rates, now makes it the opportune time to finance or lease equipment.  Business owners can deduct the full purchase price of the equipment from their gross income while making affordable monthly payments, subject to certain limitations.   With the Fed possibly set to increase interest rates this December as well, it is important to take advantage of this situation while it lasts.

Is your business planning on taking advantage of the Section 179 deduction this year?   Comment below!

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Industry professionals agree that owners should take advantage of their prosperity as soon as possible to ensure the growth of their business.  The question is, what is the best investment a business can make?  What is the best way to stretch their budget to meet all of their needs?

Here are two aspects of your business that might require updating.

Information Technology (IT)

IT is a vital aspect to the success of a business.  This is why owners have to make sure they have all the equipment that their business needs and that it is up to date.  Whether it’s computers, phone systems, or servers…. don’t let your company’s IT cripple your business.

Marketing

Marketing is moving digital, and recent studies show that video marketing is growing by 43% annually.  In order to stay up to date with the most successful marketing methods, many businesses are investing in video and camera equipment.

With increased profits and an historically low cost of funds, most companies agree that now is the right time for a business to consider leasing as a viable option to obtain the equipment they need.  Businesses can stretch their budget and get more of what they need by making affordable monthly payments instead of paying the full price for equipment using today’s dollars.

Here at TEQlease, we provide lease and financing options for all types of equipment and we can get your business the equipment it needs to succeed.

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In what amounted to a tactical retreat, Fed Chair Janet Yellen said in a press conference that developments in a tightly linked global economy had, in effect, forced the U.S. central bank’s hand. The U.S. economy has been performing well enough to perhaps justify a rate hike “and we expect it to continue to do so,” Yellen said shortly after the Fed’s policy-setting committee released its latest statement following a two-day meeting. But Yellen added that “the outlook abroad appears to have become less certain,” driving down U.S. equity prices, pushing up the dollar, and tightening financial conditions in a way that may slow U.S. growth regardless of what the Fed does. However, the Fed maintained its bias towards a rate hike sometime this year, while lowering its long-term outlook for the economy.

For charter schools this is good news, because it means historically low interest rates continue to be available, at least in the short term.  By using a lease finance solution to acquire school equipment,interest rates are locked in at the now low rates for the entire term of the lease – usually 3 to 5 years.  This enables the equipment lessee to benefit from the predictability of stable monthly payments and cash flow over the term of the lease.  The consensus also seems to be that the Fed will soon start raising rates, probably gradually.  This means that acquiring needed equipment now or before the anticipated rate hike makes sense for schools that are looking to acquire equipment within the next year.

How long do you think the low rates will last?  How will your school take advantage of the rates?  Leave your thoughts below.

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Below are eight tips for businesses to consider to ensure they don’t make any costly financial mistakes on their equipment purchases:

1.  Do the math and determine whether the Section 179 deduction and bonus depreciation will benefit your business or not. Section 179 depreciation deductions and bonus depreciation are scheduled to be scaled back after this year.  Meet with your tax advisor now and determine whether deferring a purchase may have an adverse tax impact.
2. Don’t make an equipment acquisition decision based entirely on the availability of tax incentives.
3. Understand your credit and organize your financial information before contacting an equipment financing provider. Lease financing appears readily available for equipment acquisitions for the upper tier of creditworthy borrowers, and loan demand for these borrowers is strong.  However, expect the equipment financing provider to require more financial information than in previous years.  Explain in advance any negative results.
4. Describe to the equipment financing provider what this equipment acquisition will do for your business.  Provide a projection of cost savings or incremental realizable margins.
5. Don’t assume your bank or the equipment manufacturer’s captive finance company will offer the best terms.  Compare rates, lease terms, fees and options.
6. Consider bundling multiple equipment acquisitions from different vendors under one lease with an independent commercial equipment lessor. Rates tend to be higher for smaller transactions. Bundling generally results in lower rates, and also minimizes processing fees.
7. Don’t pay upfront “application” fees to an equipment financing provider.  Do due diligence on your financing provider. Use only established providers.
8. Ask your equipment vendor for payment terms so you can defer a portion of the equipment cost, and coordinate deposits, progress payments, and performance retention payments.

If you have any questions regarding equipment leasing please let us know.

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