COVID-19 has disrupted\nbusiness-as-usual with widespread consequences in how enterprises function\npost-pandemic. The extended lockdowns and restrictions on operations globally\nhave left several companies crunched for capital with low visibility on a possible\nturnaround. <\/p>\n\n\n\n
As the pandemic prolongs,\nbusinesses find themselves in a dilemma when it comes to capital expenditures.\nOn the one hand, entrepreneurs are looking to postpone equipment purchases or\nupgrades with restricted cash reserves during a crisis. But on the other hand,\ntechnology is advancing rapidly, and entrepreneurs know of the opportunity cost\nin neglecting to invest in an upgrade – reduced productivity and obsolescence. <\/p>\n\n\n\n
Additional Read: <\/strong>Will Covid-19 impact traditional recession-proof industries?<\/a> <\/p>\n\n\n\n Equipment\nfinancing could be the right solution to\nthis dilemma. Such loans help businesses without the lumpsum capital\nexpenditure upfront to invest in their future. Access to funding to procure the\nlatest equipment could help enterprises leverage advanced technology while also\nconserving cash. <\/p>\n\n\n\n Here are a few ways in which equipment financing can play a vital\nrole in reviving businesses post the pandemic. <\/p>\n\n\n\n 1. Benefit from the latest technology: <\/strong>In today\u2019s market scenario, all businesses are trying\nto extract maximum efficiency with limited capital. And equipment financing can help companies accelerate productivity by\nbacking them with the latest technologies. Instead of waiting for months to\nrevive business and accumulate cash to upgrade machinery, equipment loans help companies benefit\nfrom cutting-edge technology without the huge upfront investment. Thereby\nimproving productivity while preserving cash reserves for more pressing\npriorities. <\/p>\n\n\n\n Moreover, the upgraded\nequipment offers enterprises an edge to stay ahead of the competition. In case\nsuch machinery needs to be imported from foreign countries, integrated solution\nproviders like Tata Capital offers foreign funding in the form of Supplier\nCredit and Buyers Credit to import machinery, giving businesses access to\ncheaper funds in foreign currency. <\/p>\n\n\n\n 2. Build Resilient Businesses: <\/strong>While\nit is easy to postpone CAPEX plans amidst a crisis, outdated machinery has\nconsequences on business that cannot be overlooked. Timely upgrade of equipment\nsets your business up for success, and equipment\nfinancing helps companies make this investment without impacting\nbusiness in the short run. Machinery\nfinance facilitates businesses to invest in the latest technology and\navoid obsolescence of machinery while building resilience in the business. <\/p>\n\n\n\n 3. Limited upfront investment: <\/strong>Given the pandemic enforced cash constraints,\nequipment financing could be an easier approach for businesses with negligible\nbudgets to modernize their equipment. Instead of investing upfront, companies\ncan make small monthly payments while using the latest machinery. <\/p>\n\n\n\n Additionally, equipment financingloans, such\nas Tata Capital, allow customers to customize their repayment schedule to align\nwith their cash flow scenario. Such flexibility helps businesses plan long-term\ninvestments in a phased manner without adding stress to the limited cashflows. <\/p>\n\n\n\n 4. Free up credit lines: <\/strong>One of the direct consequences of COVID-19 on businesses is lack of credit. Companies of all sizes struggle to make ends meet with limited cash reserves drying up faster as the pandemic prolongs. Instead of using up standard business loans to purchase new equipment, accessing equipment financing could free up traditional credit lines that can be used to invest in the business’s day-to-day operations. <\/p>\n\n\n\n 5. Option to lease instead of outright purchase: <\/strong>Alternatively, if businesses are not convinced of\ntheir investment returns, there is an option to rent instead of purchasing\nlong-term assets. Machinery can be leased for monthly rental payments for a\ndefined tenure through an operating or financial lease. The monthly rentals can\nbe shown as expenses out of the P&L, reducing taxable income and generating\ntax savings. Given the current crisis, equipment\nleasing<\/a>offered by Tata Capital could be an effective\nstrategy to benefit from the latest technological advancements without making a\nlong-term commitment. Businesses also have the choice to purchase the equipment\nat the end of the lease tenure. <\/p>\n\n\n\n 6. No additional collateral needed: <\/strong>The best part of equipment financing is that it does not require other\ncollateral, unlike conventional business loans. In equipment loans, the asset procured can be the collateral in\nitself, reducing the burden on small businesses with limited assets to\nhypothecate for financing. Companies could invest the freed-up collateral and\nexcess capital that is no longer needed upfront to meet other business\npriorities. <\/p>\n\n\n\n Additional Read: <\/strong>Corporate Loan restructuring. Will it be a Boon or a Bane for the Economy?<\/a> <\/p>\n\n\n\n Equipment financing offers\nmany benefits to businesses looking to navigate the current crisis and revive\npost the pandemic. Tata Capital\u2019s digital platform provides SMEs and MSMEs with\naccess to equipment\nloans<\/a> up to 100 Lacs in no time with limited documentation requirements.\nIncrease your capacity, enhance your efficiency, and respond to market demands\nfaster at the comfort and safety of your home by applying to our equipment loans.<\/p>\n","protected":false},"excerpt":{"rendered":" COVID-19 has disrupted business-as-usual with widespread consequences in how enterprises function post-pandemic. <\/p>\n