Out-of-warranty equipment failures, increases in membership requiring additional workout stations, and advancements in fitness technology occasionally necessitate the need for new equipment. If you rush into a purchase without considering some of the underlying facts, you might unnecessarily exhaust your working capital. The immediate answer when buying new equipment is to use cash, if you have it on hand. If that’s not an option, your bank may extend you a line of credit or a small loan to cover the cost. While both of these are easy answers, they have unseen effects on your capital and borrowing power. Leasing your purchase is often an option and most equipment dealers will present this to you. If you consider leasing as a financing alternative for your equipment purchases, you’ll realize some advantages that are quickly making it an industry standard for equipment acquisition.
Advantage #1: Conserve Your Capital. Having cash on hand is one of the best measures you can use to gauge how well your club is doing. There is no substitute for cash when those unexpected expenses arise. Simply measuring the capital your equipment can generate, if you keep it in reserve, should be weighed against the cost of borrowing for your next equipment purchase. Financing companies and banks typically charge much higher rates for smaller, unsecured loans than they do for equipment purchases. If you were to use your available cash to invest in new equipment and then an emergency purchase arose requiring you to borrow additional money, it could actually cost you a great deal more than if you had originally leased your equipment.
Advantage #2: The Ever-Changing World. Paying cash or using a bank line of credit for your equipment will lock you in to that acquisition with no “wiggle room.” The cash or credit lines are yours to do with as you please, however, if an equipment deal comes along that is a better fit for your club, you’ll be tied down to the equipment for which you already paid for. Leasing your equipment can help protect you against rapidly changing technological advancements. Leasing companies will often write a lease that allows you to upgrade your equipment at the end of the term. By choosing a Fair Market Value leasing option, you will often keep your payments lower because you only pay for the equipment’s usage. If you stay in the lease to the end of the term chosen, you can buy your equipment outright for its market value, continue leasing it, or exchange it to lease a newer model.
Advantage #3: Flexibility. Leasing companies are remarkably flexible. Where a bank will often require you make level monthly payments, leasing companies can often structure a lease to meet your cash flow needs, for example, allowing you to make larger payments during peak seasons and lower payments during slow ones. Leasing companies often offer “no money down” specials to qualified buyers or “business builder” programs with initially lower payments as you introduce a product into your club. A couple of leasing companies even offer a “no prepayment penalty” clause, allowing you to purchase leased equipment outright after a set number of payments. This option allows you get into equipment that may be a little out of your price range; to upgrade your club, and attract new members. Request a longer term for a reduced rate and, to avoid strain on your cash flow over the full term, pay it off early.
Advantage #4: Borrowing Power. When banks lend you money, they file a Uniform Commercial Code (UCC) financing statement, typically an “allinclusive” lien against your business. This public record informs other creditors who have an interest in your business that the bank has placed the lien. These liens often include your receivables, your inventory, and any equipment you’ve purchased outright. Liens tie up your borrowing power for additional purchases that arise during the term of your loan. Conversely, most leasing companies only file a financing statement against the equipment being leased. Once the lease is paid in full, you will receive a bill of sale and the lien will be released. While this may not seem to be a big concern at first if, later, you seek a loan to renovate your club, an existing bank lien against your business would raise concern by the company selected to finance your renovations.
Virtually every piece of equipment in your club can be financed through a lease, from the cash register to the heating and cooling system. Some equipment distributors and most manufacturers of fitness equipment can recommend leasing companies to finance your equipment. Many large banks have started leasing divisions – specializing in equipment leasing – that extend lower rates and more competitive programs than non-bank finance companies, passing the savings on to your club.
Rob Hardcastle is the Business Development Officer for Popular Leasing, specializing in fitness and commercial equipment financing. He can be contacted at 800.829.9411, or by email at rhardcastle@popularleasingusa.com.
![[solidcore] ascend](https://clubsolutionsmagazine.com/wp-content/uploads/2026/09/web_SHOT_24_declinepushup_1596EDITC-copy-350x250.jpg)
