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Ultrasound Machine Leasing - Costs and How To Qualify

Posted by Rob Misheloff

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We get calls from a lot of businesses in different medical specialties about leasing new or used ultrasound machines. The two biggest questions we get are how to qualify and what the costs will be, so let's go ahead and answer these two basic questions.

How to Qualify for a Medical Equipment Loan to Lease an Ultrasound Machine

Most owners of established businesses with good credit know they'll qualify for leasing.

We get these questions from three types of borrower:

  1. New businesses (or people about to start a business)
  2. People with bad credit
  3. New Businesses with Bad Credit

Let's talk about qualifying in each of these situations:

New Business Ultrasound Machine Leasing:

There are many equipment vendors and equipment leasing companies that will not provide financing to businesses less than 2 years old because they are uncomfortable with the risks involved in lending to a new business - according to the SBA half of new small businesses fail in the first 5 years.

We help plenty of new businesses get financing for equipment, though standards are a bit tighter than for an established business. 

If you've got good credit, or at least decent credit, there shouldn't be any problem qualifying to finance your equipment. Costs will be higher, commensurate with the risks (we'll cover costs in the next section).

Ultrasound Machine Leasing with Bad Credit

We get many inquiries from people about leasing with bad credit, although half the time when we find your credit score, it's not really that bad. In general, if your credit score is at least in the 600's, if you've been in business at least two years and aren't about to go bankrupt, there won't be a problem financing you.

Ultrasound Leasing for New Businesses with Bad Credit

If you're a new business owner and your credit is below 600, it will be a real challenge to find you financing, although with collateral or a 50% down payment, it's not impossible - but financing won't be cheap.

Ultrasound Equipment Leasing Costs

We find there's always a little bit of confusion about the term "equipment leasing." Some people think we're talking about renting machines, while others don't realize and equipment leasing company can facilitate both leases and loans. Let's start with talking about the different types of equipment acquisition so that we can be clear about what the costs are.

Other than paying cash, there are 3 basic ways to get an ultrasound machine:

  1. Rental
  2. Equipment Leasing
  3. Equipment Loans

How much does it Cost to Rent Ultrasound Equipment?

When talking about equipment rental, that's the same as when you rent a car. You can rent for days, weeks, or months. Just like car rental, the costs on a monthly basis will be 2 to 4 times the costs of if you just made payments against a finance agreement.

If you need equipment for long term, rental just doesn't make sense. The only time rentals would be acceptable for long term use is if you absolutely can't run your business without that piece of equipment and can't get financing anywhere.

Lease Ultrasound Equipment

As opposed to rental, leasing medical equipment is like leasing your car. You make payments against the machine for a set period of time, typically 2 to 5 years, and at the end you can buy the equipment for a fixed residual or you can let the equipment leasing company take possession of the equipment.

Leasing is lower than the cost of a loan, also called an Equipment Finance Agreement (EFA), on a monthly basis, but that 's not the real reason companies choose to lease. Leasing is extraordinarily "tax-friendly" - you may write off the entire payments as an operating expense.

Equipment Finance Agreements (Loans) for Ultrasound Equipment

An equipment finance agreement is like buying a car and getting a loan on it. You make payments over a set number of years, 2 to 5, and own the equipment at the end (you make a final payment of $1).

The monthly payments will be a little bit higher than on a medical equipment lease, but you won't have a residual at the end. You can either write off the entire cost of the equipment (up to $25,000) immediately, or have your accountant depreciate the equipment over time.

What Will Monthly Payments be to Lease or Finance Ultrasound Equipment?

How much you will pay monthly depends on a few things, namely,

  1. How much the machine costs
  2. If you are new in business
  3. Your credit

Let's assume you're buying a used machine for $20,000 (so if you're buying a $40,000 machine, just double the numbers that follow, etc.)

Ultrasound Leasing and Loan Costs for a New Business

If you're new in business, your costs will depend somewhat on your credit history, let's look at the following costs for a lease (with a loan, it's safe to assume the payment just increases by about 8%)

  • With good credit (675+), about $1,000 a month for two years, or $600 a month for four
  • With OK credit (640-675), about $1,100 a month for two years, or $675 a month for four
  • With bad credit (590-640), about $1,300 a month for two years, or $725 a month for four
  • With ugly credit (under 590), financing gets ugly, you're looking at $1,800 monthly for 2 years and about $1,150 a month for 4.

Ultrasound Leasing and Loan Costs for an Established Business

Costs are lower in leasing if you've been around a couple of years. Let's do the same calculations we did above, but for a business that isn't new.

  • With good credit (675+), about $950 a month for two years, or $525 a month for four
  • With OK credit (640-675), about $1,000 a month for two years, or $600 a month for four
  • With bad credit (590-640), about $1,150 a month for two years, or $725 a month for four
  • With ugly credit (under 590), financing gets ugly, you're looking at $1,800 monthly for 2 years and about $1,150 a month for 4.

Smarter Finance USA can help you finance your ultrasound machine. For more information, click here or give us a call at (866) 631-9996.

 

 

 

 

 

 

Topics: equipment leasing rates, medical equipment loans

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