Computer Financing - Heartland Financial Group

Computer Financing: The Best Options to Set Up Your Business for Success 

Due to shortages, computers have become increasingly more expensive. Computer financing has the potential to save your company a significant amount of money.

Equipment leasing and financing options are the way to go for most businesses looking to outfit themselves with pricy heavy-duty equipment, move to a new location, or acquire commercial real estate. But what about smaller purchases?

The costs of outfitting an office or shipping top-quality equipment to a team of remote employees is not to be underestimated. Depending on what industry you’re in, you may have a legitimate need to sink over a thousand dollars into each workstation at your company.


The Need for Computers and IT Equipment

Game development companies, animation studios, architecture firms, quality assurance testing businesses, video editing and effects specialists, software development firms, professional photography studios, digital marketing firms, and many other types of businesses need a lot of equipment dedicated to developing stunning 4K video, countless high-resolution digital assets, quality textures, high-polygonal meshes, complex 3D models, and dozens of hours of rendering.

With the prices of graphical processing units and central processing units rising, even modest workstations used for any professional tasks can cost more than they might have just a few years ago. Despite that, the demands for any given industry have only gotten steeper.

Better animation quality, better meshes and models, more impressive features, video with four times the resolution of old industry standards, and concurrently more necessary computational power.

The impact that the semiconductor shortages are having on manufacturers of all sorts of both digital and physical products and services is an additional factor, and industry experts say that the shortage is an issue we’re probably going to continue to face down for another two years, at least. The rising popularity of crypto mining and NFTs isn’t likely to help prices stay down, either.

So, if you’re a company in any of the aforementioned industries or some other competitive market where having top-of-the-line computational power – and the associated peripherals – is critical, what do you do? You seek IT equipment leasing.


What is Computer Financing? 

Computer financing options are provided by financial firms, lenders, and certain vendors in the tech industry as an alternative to outright purchasing computers and computer equipment with company capital.

As with any other form of equipment financing, the basics are as follows:

  • You find the equipment you need and the budget you have to work with.
  • Settle on a lease or financing option with the vendor or a financial middle man acting as a lender.
  • You make monthly payments until the lease or loan is over.
  • In the end, you either return the equipment or – much more likely, especially for computers – you own it outright.

The cost benefit of buying equipment upfront is that it’s just cheaper in the long-term. But not all businesses can afford to think in the long-term when it comes to managing their capital for equipment they need to work with right now.

Financing requires you to pay interest but allows you to preserve your working capital, keep open the option of seeking a bank loan for better cash flow, and improve your working relationship with a potential long-term partner in the form of a vendor or lender.


When is Computer Financing a Good Idea? 

Unlike many other equipment financing options, most computer financing options are relatively short-term as the loan amounts aren’t quite on the same cost level as a fleet of vehicles or heavy equipment. In addition, you might meet less steep requirements when seeking financing for computers versus other types of equipment. However, it ultimately depends on the financial commitment you need to make.

If you’re outfitting an entire business from scratch, you may be looking at a total bill well into the tens of thousands. Most companies, even smaller ones, can stomach outfitting a single new workstation from their own budget – but once the cost jumps to outfitting a whole new team or branch, it can become a serious investment.


Can Anyone Seek Computer Leasing? 

Computer financing, and equipment financing as a whole, will always have individual requirements that depend wholly on what you plan to acquire. However, whether you’re outfitting a few desks or a whole floor, there are several general requirements that a company must usually have at hand.

The first is a decent business credit score. You can find your business credit score online. It’s an incredibly useful metric to keep an eye on, regardless of what stage your business is in. You will always need to buy new equipment, either to upgrade, or to replace old equipment, or accommodate growth within the company. Your credit score also plays a role in any other sort of financing, including seeking bank loans, commercial real estate, and more.

Unique to business purchases, from equipment to land, is the need for a comprehensive business plan. Most lenders and financing companies want to know what your business is doing and whether it’s viable.

This is partly to ensure that you won’t go under before you can pay your dues, and mainly because a business plan will also include key financial information – such as how long the business has been run and what your annual revenue looks like – to help guide the lender’s decision.

Other key financial information, including a basic balance sheet or cash flow statement, may also be requested depending on the level of financing you need. Depending on the structure of your business, you might need to provide some personal documentation – particularly personal debt.


How Does Computer Financing Work?

To summarize in a few steps:  

  • First, you will want to gather your qualifications.
  • Then, seek the appropriate lender. You can work with financial institutions, lending banks, online vendors, or specialized lenders. There are pros and cons to each choice.
  • Finally, your budget and needs will play a role in determining the final arrangement.

There isn’t much room for negotiation when a lender comes to you with an agreement, but you should feel free to shop around and speak with other lenders and vendors.


How Does Computer Leasing Help Large Businesses? 

Even large businesses can benefit from utilizing financing for their workstations and computer resources versus an out-of-pocket purchase.

Companies use equipment financing options regardless of their size in order to preserve their working capital, preserve cash flow, and make use of their capital for investments, costs, and losses that they cannot cover as flexibly or as cheaply with loans and financing.

A large company can benefit from working with a vendor or specialized lender to finance their new equipment acquisitions.