There are many things to consider when purchasing grand-format printing equipment: what manufacturer to choose, what distributor to buy from, what technology works best for the products you will be printing, and so on. However, maybe the most important thing to consider is how you are going to pay for it. Grand-format printing equipment and the equipment to support it can run into the hundreds of thousands of dollars. It is a large investment, and it is best to look at the many options available for paying for your new equipment, before moving forward.

Cash on the Barrelhead

The easiest and fastest method for anyone to purchase equipment would be to simply pay cash.  This is quick and requires no approval or application process, however can put a strain on working capital that is needed for day to day expenses, payroll, unexpected business needs or anything else that may arise.  If you like to conserve your cash or do not have the reserves for a large purchase, financing the equipment may be right for you for both tax and budget needs.

Bank Loans

A loan from your local bank is one option to consider when looking at a large capital purchase.  Banks offer a variety of options from lines of credit, in house loans, or possibly facilitating an SBA loan for you to name a few products.  A couple items to keep in mind when discussing a purchase with the bank would be; is the interest rate or payments fixed or fluctuating, how much cash down is needed, what fees are involved with the purchase, is there any form of blanket lien filed (this would put a lien on other assets in addition to the piece of equipment you are financing) and what amount of information is needed to get approved in addition to an application.

Leasing Options

Using lease financing is another option to secure the equipment you need.  Lease financing is typically a fast approval process (can be just an application with no financial statements, etc.) and most of the time offers 100 percent financing, which can include some soft costs to cover material or inks needed, installation, delivery, etc.  Lease financing can be structured to allow for expensing of the monthly payments over the term of the lease, can be set up to depreciate the equipment on a 5-7 year schedule or can allow for a 100 percent write off in the year acquired if your business qualifies for a Section 179 deduction.  A lease is a good option to consider if you want to upgrade the asset being purchased in the next 3-5 years as technology changes. 

Vendor Financing

The vendor you are purchasing the equipment from is often another good source for discussing available financing options.  Some manufacturers/distributors have internal financing available that they offer directly, or they may have a third-party company that they refer you to as a financing source. 

The benefit of working with a company the equipment vendor recommends is the finance company usually understands the asset you are purchasing and the markets you do business in.  This would typically allow the finance company to be more aggressive in approvals, allow for less cash down and offer longer terms for the purchase to be financed over.

Do Your Homework

No matter which option you choose to pay for your new equipment; cash, a bank loan or an equipment lease; do your homework.  If you are an established business and have good credit there are many options available to you.  Find out if the company you are using to fund the transaction understands your market and the equipment you are buying.  Will they be there to help if issues do arise?  Are they a direct lender or a broker who is going to sell your paper and move?  Take into consideration the useful life of the asset, the tax benefits your company needs both today and in future years, and the company you are using for financing.