New equipment purchases may seem like an expensive endeavor for some small businesses, but they should rest assured that there are plenty of reasons for making such investments in the current marketplace. Sales are up, as are new tax credits in some areas of the country, and making such purchases can help owners fight back against a somewhat-uneasy larger market.
New business volume grows in 2013
According to Monitor Daily, recent reports from the equipment finance industry saw total business volume grow by 9.3 percent in the last year. These figures were pulled from the 2014 Survey of Equipment Finance Activity, released by the Equipment Leasing and Finance Association (ELFA).
This growth in volume is a decline from the reported figures from 2011 and 2012, which each stood at about 16.5 percent, but it was a marked improvement over figures reported in 2009 and 2010. In the fallout of the global recession, the end of the decade saw a 30 percent decline in 2009 and just a 4 percent increase was seen in 2010.
The ELFA also released a report called the 2014 Small-Ticket Survey of Equipment Finance Activity, the news source noted, which focuses on smaller-ticket equipment transactions among these respondents. The survey found that new business volume among smaller equipment transactions saw higher growth, standing at 10.2 percent in 2013.
"The data show[s] the equipment finance sector continued to gain momentum as the economy improved in 2013," said William G. Sutton, CAE, ELFA president and CEO, in a statement cited by the news source. "More recent data collected in 2014 indicate that growth is continuing amid a slow economic recovery, at a more tempered rate."
Tax credit can inspire further sales
Some businesses may not know about the tax incentives that they can use in the process of adding new equipment to their means. One tax credit that has recently gone into effect may help people looking to retool and improve their businesses.
Capital Public Radio reported that a 4 percent sales tax credit on the sale of manufacturing, research and development equipment was approved in California, which was one of the few states without such an incentive already on the books. Small business owners say that any tax relief provided by the state will be a valuable tool to help people update their technology means.
Supporters believe that small businesses would be great beneficiaries of the new move, but they wouldn't be the only ones benefiting from the addition. It's expected that it will allow for competition throughout the state to improve, experts told the news source.
This comes after a 6 percent sales tax credit on manufacturing equipment expired more than 10 years ago.
Can lift spirits
While recent market results saw hiring growing among small businesses, new equipment can spark better levels of production quality to help offset a dip in optimism. Inc. Magazine reported that recent National Federation of Independent Business survey results have tempered projections for the near future in the market. Owners believing the economy will improve in the next few months fell by 10 percentage points, while sales improvement expectations declined by 4 points. Another issue came from investment plans, including equipment spending, falling by 2 percent.
If businesses work to add new technology to their means, however, they can likely work to offset these lukewarm projections for the next few months. The new equipment can inspire innovation and improvement in modern-day business practices, helping owners shake off negative perceptions of the near future.
Equipment and business industry piece brought to you by Marlin Equipment Finance, leaders in equipment financing. Marlin is a nationwide provider of equipment financing solutions supporting equipment suppliers and manufacturers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.