equipment leasing business plan

Equipment Leasing Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business ideas » Service Industry » Equipment Rental & Leasing Business

If you are looking for a business that doesn’t require much stress or perhaps extensive period of training, then you should consider starting an equipment leasing business.

The truth is that this is one of the businesses that you can comfortably combine with another business and still have time to effectively manage both. There are loads of technicians and artisans who don’t have the required capital to acquire all the equipment needed to run their business but can afford to rent such equipment if they can find a place to rent from.

Much more than technicians and artisans, some organizations also rent equipment to carry out a project or job because it is cost effective for them to rent as against purchasing such equipment.

Ideally, people prefer to rent equipment to do a one – off job . So your responsibility is to look for such equipment and ensure that you have them in your store. So if you have decided to start an equipment leasing business, then you should ensure that you carry out feasibility studies and also market survey.

Business plan is yet another very important business document that you should not take for granted in the bid to launching your own business. Below is a sample equipment leasing business plan template that can help you to successfully write your own with little or no difficulty.

A Sample Equipment Leasing Business Plan Template

1. industry overview.

Equipment leasing business is part of the Industrial Equipment Rental & Leasing industry and this industry is made up of businesses that engage in general industrial equipment rental, light construction equipment rental, medical equipment rental, audiovisual equipment rental, industrial energy equipment and pumps rental, theatrical and motion picture rental amongst others.

In general, the Industrial Equipment Rental and Leasing industry offers a range of products, including industrial machinery, some construction equipment, entertainment products and medical devices, for fixed-term use. The variety of products rented or leased mitigates the impact of increasing demand.

Going forward, the industry will continue benefiting from contractors resuming their prominence as the industry’s largest consumer group. This will be supported by steady growth in the number of construction projects in both residential and nonresidential markets.

The Industrial Equipment Rental and Leasing Industry is indeed a large and vibrant industry not only in the united states of America and but also in most countries of the world. Statistics has it that the Industrial Equipment Rental and Leasing industry in the United States of America is worth about $37 billion, with an estimated growth rate of 7.2 percent between 2012 and 2017.

There are about 9,271 registered and licensed industrial equipment rental and leasing businesses in the United States and they are responsible for employing about 109,710 people. In the United States, it is only United Rentals Inc. that can boast of having the lion market share in the industry, so the industry is still very much open to investors who would want to launch their own equipment leasing business.

A recent report published by IBISWorld shows that over the past five years, the Industrial Equipment Rental & Leasing in the US industry has grown by 7.2 percent to reach revenue of $37bn in 2017. In the same timeframe, the number of businesses has grown by 3.0 percent and the number of employees has grown by 4.6 percent.

The Industrial Equipment Rental and Leasing industry is in the mature phase of its life cycle as indicated by its growth rate over the 10 years to 2022 and the widespread but growing acceptance of its services in downstream markets. This trend is not true globally, however, as the maturity of the Tool and Equipment Rental industry varies considerably depending on the country’s equipment sales performance.

Industry value added (IVA) is forecast to grow at an annualized rate of 2.4 percent over the 10 years to 2022, relatively in line with the projected growth of US GDP, which is set to rise at an annualized rate of 2.0 percent during the same period. IVA is a function of wages, depreciation and profit margins.

Lastly, it is a fact that the industrial equipment leasing and rental industry is indeed a profitable industry to venture into and the entry bar for starting the business is not too difficult to scale through.

The truth is that if an equipment leasing business is stocked with a wide array of equipment and also well positioned in an environment with the right demography, they will sure attract regular clients and their equipment will be hired on a regular basis.

2. Executive Summary

Drucker Philemon® Equipment Leasing Company, LLC is a licensed industrial equipment leasing and rental company that will be based in Hartford – Connecticut. We have been able to secure a corner piece property in a centralized and busy industrial location in the heart of the city; a location with robust industrial activities and the right demography for the kind of business we want to run.

We are a standard industrial equipment leasing and rental company that will be involved in leasing and renting equipment such as, mower, hand drillers, heavy duty drillers, welding machines, forklifts, light construction equipment, medical equipment, audiovisual equipment, industrial energy equipment and pumps and theatrical and motion picture equipment, power saw, filling machine, scaffoldings and virtually any equipment that is needed to get any task done.

Drucker Philemon® Equipment Leasing Company, LLC is a client-focused and result driven industrial equipment leasing and rental outfit that provides reliable industrial equipment and tools at an affordable fee that won’t in any way put a hole in the pocket of our clients. We will ensure that we will surpass our clients’ expectations whenever they rent tools and equipment from us.

Drucker Philemon® Equipment Leasing Company, LLC will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Our plan is to position Drucker Philemon® Equipment Leasing Company, LLC to become the leading brand in the industrial equipment leasing and rental industry in the whole of Connecticut, and also to be amongst the top 10 industrial equipment leasing and rental outfits in the United States of America within the first 10 years of operation.

This might look too tall a dream but we are optimistic that this will surely come to pass because we have done our research and feasibility studies and we are confident that Hartford – Connecticut is the right place to launch our industrial equipment leasing and rental business.

Drucker Philemon® Equipment Leasing Company, LLC is family business that is owned by Mr. Drucker Philemon and her immediate family members.

The organization will be managed by Mr. Drucker Philemon who has over 17 years’ hands on experience working at various capacities within the equipment leasing and rental industry in the United States. Drucker Philemon has a Diploma in Mechanical Engineering from the University of Connecticut.

3. Our Products and Services

Drucker Philemon® Equipment Leasing Company, LLC is going to offer varieties of services within the scope of the industrial equipment leasing and rental industry in the United States of America.

Our intention of starting our industrial equipment leasing and rental company is to make profits from the industry and we will do all that is permitted by the law in the US to achieve our aim and ambition. Our business offerings are listed below;

• General industrial equipment rental
• Light construction equipment rental
• Medical equipment rental
• Audiovisual equipment rental
• Industrial energy equipment and pumps rental
• Theatrical and motion picture rental
• Retail sales, product delivery and repair
• Rental of other products
• Rental of contractors’ and builders’ tools and equipment

4. Our Mission and Vision Statement

• Our vision is to build an industrial equipment leasing and rental business that will become the number one choice for both individual and corporate clients in the whole of Hartford – Connecticut. We want to be known as the go to company when it comes to industrial equipment leasing and rental.
• Our mission as an industrial equipment leasing and rental company is to service a wide range of clientele. We are going to position the business to become the leading brand in the industry in the whole of Hartford – Connecticut, and also to be amongst the top 10 equipment leasing and rental companies in the United States of America within the first 10 years of fully launching the business.

Our Business Structure

Drucker Philemon® Equipment Leasing Company, LLC is an industrial equipment leasing and rental company that intends to start small in Hartford – Connecticut, but looks to grow big in order to compete favorably with leading industrial equipment leasing and rental companies.

We are aware of the importance of building a solid business structure that can support the picture of the kind of world class equipment leasing and rental business we want to own. This is why we are committed to only hiring the best hands within our area of operations.

At Drucker Philemon® Equipment Leasing Company, LLC, we will ensure that we hire people that are qualified, hardworking, creative, customer centric and are ready to work to help us build a prosperous business that will benefit all the stakeholders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more as agreed by the board of trustees of the company. In view of the above, we have decided to hire qualified and competent hands to occupy the following positions in our organization;

• Chief Executive Officer (Owner)

Equipment Rental Manager

Admin and HR Manager

Marketing and Sales Executive

• Customer Services Executive

Truck Driver

5. Job Roles and Responsibilities

Chief Executive Office:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Manages the rental of equipment in our organisation
• Achieves maximum profitability and over-all success by controlling costs and quality of equipment and service.
• Schedules staff as necessary to ensure adequate and consistent levels of service
• Responsible for industrial equipment leasing and rental control policies and completion of necessary forms.
• Follows proper purchasing and requisitioning procedures.
• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Defines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities.
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts
• Writes winning proposal documents, negotiate fees and rates in line with company policy
• Responsible for handling business research, marker surveys and feasibility studies
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company
• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting for one or more properties.
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the company
• Serves as internal auditor for the company

Client Service Executive

• Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the manager in an effective and timely manner
• Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries
• Responsible for transporting heavy duty equipment to project sites of clients as agreed by the company
• Runs errand for the organization
• Handles any other duty as assigned by the equipment rental manager.

6. SWOT Analysis

Because of our drive for excellence, we were able to engage some of the finest business consultants in Hartford – Connecticut to look through our business concept and together we were able to examine the prospect of the business and to access ourselves to be sure we have what it takes to run the business.

In view of that, we were able to take stock of our strengths, our weakness, our opportunities and also the threats that we are likely going to be exposed to in Hartford – Connecticut. Here is a of what we got from the SWOT Analysis that was conducted for Drucker Philemon® Equipment Leasing Company, LLC;

Notwithstanding the fact that all our industrial equipment and tools are of world – class standard and our business is well positioned and equipped, we have a team that are trained and equipped to pay attention to details as regard assembling, servicing and maintaining industrial equipment. We are well positioned and we know we will attract loads of clients from the first day we open our doors for business.

As a new industrial equipment leasing and rental company, it might take some time for our organization to break into the market and gain acceptance in the already saturated industrial equipment leasing and rental industry especially from corporate clients; that is perhaps our major weakness.

Opportunities:

The opportunities in the industrial equipment leasing and rental industry is massive considering the number of individuals and businesses that for obvious reasons would prefer renting or leasing equipment as against purchasing. As a standard equipment leasing and rental company, we are ready to take advantage of any opportunity that comes our way.

Some of the threats that we may likely face as an industrial equipment leasing and rental company operating in the United States are unfavorable government policies , the arrival of a competitor within our location of operation and of course a sharp drop in the prices of the industrial equipment that we put out for leasing.

7. MARKET ANALYSIS

• Market Trends

The trends in the industrial equipment leasing and rental industry shows that interest rates are an important demand determinant, as loans, mortgages and bonds finance most developments and renovations. Low interest rates encourage new construction and economic activity because the cost of financing expansion drops, which ultimately raises demand for rented equipment.

Although some companies may buy more and rent less if rates are low, given the inexpensive credit, a low rate’s positive effect on demand in the economy is substantial and helps the industry. The yield on the 10-year Treasury note is expected to rise in 2017, presenting a potential threat to the industry.

As a matter of fact, investment in the private construction of educational, commercial and other facilities directly influences demand for commercial and industrial equipment rental. When the number of facilities being constructed or renovated is on the rise, general contractors need more equipment for fixed-time use.

This boosts industry revenue derived from renting equipment for carpentry, carpet cleaning, scaffolding, floor waxing and sanding to general contractors. The value of private nonresidential construction is expected to increase in 2017, presenting a potential opportunity for the industry.

The fact remains that the industrial equipment leasing and rental industry is in a continuous state of evolution and as such, ground breaking strategies and ideas that are once highly successful are no longer as productive as they were in time past.

Close observation of the trend in the industry reveals that the past few years have seen the rise and proliferation of new tech tools. The trends also extend to increased attention paid to engagement and new market segments, adopting eco-friendly measures and sustainability when making use of equipment and tool, and of course increase in demands from contractors.

Lastly, aside from excellent customer services, equipment leasing and rental companies ensure that they have some of the best and latest equipment and tools they can get even if it means importing them or customizing them.

8. Our Target Market

Even though Drucker Philemon® Equipment Leasing Company, LLC will initially serve small to medium sized business, but that does not in any way stop us from growing to be able to compete with leading industrial equipment leasing and rental companies in the United States.

As an all – round industrial equipment leasing and rental company, Drucker Philemon® Equipment Leasing Company, LLC offers a wide range of services hence we are equipped to service a wide range of clientele base. Our target market cuts across players in different industries.

Below are some of our target customers;

• Building and construction contractors
• Film producers/makers
• Industrial cleaning companies
• Engineering companies
• Servicing and maintenance companies

Our competitive advantage

We know that to be highly competitive in the industrial equipment leasing and rental industry means that your equipment must be of high standard and your business must be well – positioned and you should be able to deliver consistent quality service.

Drucker Philemon® Equipment Leasing Company, LLC might be a new entrant into the industry in the United States of America, but the management staff of the business are highly qualified to run such business.

Other competitive advantages that we are bringing to the market are our ability to quickly adopt new technology, economies of scale and the fact that all our tools and equipment are of world – class standard and the business is well positioned to meet the 21st century demand. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be amongst the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals.

9. SALES AND MARKETING STRATEGY

We are mindful of the fact that there is stiff competition amongst industrial equipment leasing and rental companies in the United States of America; hence we have been able to hire some of the best business developers to handle our sales and marketing concerns.

Our sales and marketing team will be recruited based on their vast experience in the industrial equipment leasing and rental industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization.

We will also ensure that our excellent job deliveries speak for us in the market place; we want to build a standard business that will leverage on word of mouth advertisement from satisfied clients.

Our goal is to grow our industrial equipment leasing and rental company to become one of the top 10 rental companies in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with in Hartford – Connecticut.

Drucker Philemon® Equipment Leasing Company, LLC is set to make use of the following marketing and sales strategies to attract clients;

• Introduce our business by sending introductory letters alongside our brochure to contractors, engineers, film makers, industries, plumbers, households and key stake holders in Hartford and other cities in Connecticut
• Advertise our business in relevant related magazines, newspapers, TV and radio stations.
• List our business on yellow pages’ ads (local directories)
• Attend relevant international and local expos, seminars, and business fairs et al
• Create different packages for different category of clients in order to work with their budgets and still deliver quality equipment and services to them
• Leverage on the internet to promote our business
• Engage direct marketing approach
• Encourage word of mouth marketing from loyal and satisfied clients
• Join local chambers of commerce and industry with the aim of marketing our business
• Make use of attractive hand bills to create awareness and also to give direction to our facility
• Adopt direct mailing coupon marketing approach
• Position our signage / flexi banners at strategic places in and around Hartford – Connecticut
• Create a loyalty plan that will enable us reward our consistent clients especially those that refer clients to us.
• Engage in roadshows within our neighborhood to create awareness for our industrial equipment leasing and rental business.

Sources of Income

Drucker Philemon® Equipment Leasing Company, LLC is established with the aim of maximizing profits in the industrial equipment leasing and rental industry and we are going to go all the way to ensure that we do all it takes to attract clients on a regular basis.

Drucker Philemon® Equipment Leasing Company, LLC will generate income by offering the following equipment and tools rental services for individual clients and for corporate organizations;

10. Sales Forecast

One thing is certain, there would always be need to carry out some jobs that require the rental of industrial equipment and power tools in the United States of America and as such the services of industrial equipment leasing and rental companies will always be needed. This, we have at the back of our minds always.

We are well positioned to take on the available market in Hartford – Connecticut and we are quite optimistic that we will meet our set target from the first six months of operation.

We have been able to examine the industrial equipment leasing and rental market, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projections are based on information gathered on the field and some assumptions that are peculiar to startups in Hartford – Connecticut.

Below are the sales projection for Drucker Philemon® Equipment Leasing Company, LLC, it is based on the location of our business and the wide range of tools, plants and industrial equipment that we will be offering;

• First Fiscal Year : $250,000
• Second Fiscal Year : $650,000
• Third Fiscal Year : $970,000

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and natural disasters within the period stated above. There won’t be any major competitor offering same additional services as we do within same location.

11. Publicity and Advertising Strategy

We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the industrial equipment leasing and rental industry by storm which is why we have made provisions for effective publicity and advertisement of our industrial equipment leasing and rental company.

Below are the platforms we intend to leverage on to promote and advertise Drucker Philemon® Equipment Leasing Company, LLC;

• Place adverts on both print (community based newspapers and magazines) and electronic media platforms
• Sponsor relevant community based events / programs
• Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our brand
• Install our billboards in strategic locations all around Hartford – Connecticut
• Engage in roadshows from time to time in target neighborhoods to create awareness of our business
• Distribute our fliers and handbills in target areas
• Ensure that all our workers wear our branded shirts and all our vehicles and trucks are branded with our company’s logo et al.

12. Our Pricing Strategy

Just like in rental and consulting business, hourly billing for rental services is also a long – time tradition in the industry. However, for some types of rental services, flat fees make more sense because they allow clients to better predict the overall service charges.

As a result of this, Drucker Philemon® Equipment Leasing Company, LLC will charge our clients both flat fee and hourly billing as long as it favors both parties. At Drucker Philemon® Equipment Leasing Company, LLC we will keep our fees below the average market rate for all of our clients by keeping our overhead low and by collecting payment in advance.

We are aware that there are some clients especially contractors that would need to rent tools and equipment on a regular basis, we will offer flat rate for such services that will be tailored to take care of such clients’ needs.

• Payment Options

The payment policy adopted by Drucker Philemon® Equipment Leasing Company, LLC is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Drucker Philemon® Equipment Leasing Company, LLC will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via credit cards
• Payment via online bank transfer
• Payment via check

In view of the above, we have chosen banking platforms that will enable our client make payment for rentals or our equipment and tools without any stress on their part. Our bank account numbers will be made available on our website and promotional materials

13. Startup Expenditure (Budget)

From our market survey and feasibility studies, we have been able to come up with a detailed budget on achieving our aim of establishing a standard and one stop industrial equipment leasing and rental company in Hartford – Connecticut and here are the key areas where we will spend our start – up capital;

• The total fee for incorporating the Business in the United States of America- $750.
• The budget for basic insurance policy covers , permits and business license – $2,500
• The amount needed to acquire a suitable facility that will accommodate our heavy duty plants, tools and equipment, trucks and small office facility (Re – Construction of the facility inclusive) – $150,000.
• The cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $ 5,000
• The cost of launching an official website – $600
• The cost for the purchase of standard industrial equipment and tools  – $100,000
• The cost for the purchase of a truck – $10,000
• Budget for paying at least 4 employees for 2 months plus utility bills – $70,000
• Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
• Miscellaneous: $5,000

Going by the report from the market research and feasibility studies conducted, we will need about four hundred and fifty thousand (450,000) U.S. dollars to successfully set up a medium scale but standard industrial equipment leasing and rental business firm in the United States of America.

Generating Startup Capital for Drucker Philemon® Equipment Leasing Company

Drucker Philemon® Equipment Leasing Company, LLC is a family business that will be owned by Mr. Drucker Philemon and his immediate family members. They are the only financier of the business, which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.

• Generate part of the startup capital from personal savings
•  Source for soft loans from family members and friends
• Apply for loan from the bank

N.B : We have been able to generate about $150,000 (Personal savings $100,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Drucker Philemon® Equipment Leasing Company, LLC is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to rental out our power tools and industrial equipment a little bit lower than what is obtainable in the market and we are prepared to survive on lower profit margin for a while.

Drucker Philemon® Equipment Leasing Company, LLC will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.

We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check : Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Securing a standard warehouse facility and reconstruction inclusive: In Progress
• Conducting Feasibility Studies: Completed
• Generating part of the startup capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the needed furniture, office equipment, electronic appliances and facility facelift: In progress
• Purchase of various sizes of standard power tools and industrial equipment: Completed
• Purchase of trucks and vans: Completed
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress
• Establishing business relationship with vendors and key players in the industry: In Progress

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Guide To Starting A Profitable Equipment Rental Company In 2021

Sept. 18, 2021

The equipment rental industry has outgrown the overall construction industry over the past few decades. Learn how you can start your own equipment rental company.

Equipment Rental Industry Overview

Owning and operating an equipment rental business can be very rewarding and profitable. Many equipment rental business owners started out with one used machine, and gradually built up their businesses through hard work, great customer service and maintaining a fresh and healthy equipment fleet.

Starting an equipment rental company is not as expensive or encumbering as you would think. With some careful planning, initial capital, and passion for the industry, you can start your own equipment rental company in a few weeks.

The equipment rental industry has grown at about 5% per year over the past few decades. The outlook for the industry is very positive, with many industry experts forecasting 4-5% annual growth over the coming years. The long-term shift by contractors to rent more equipment is causing the equipment rental industry to outgrow the overall construction industry.

Equipment Rental Industry Market Share

The equipment rental industry is very fragmented - this means that the vast majority of industry sales are generated by small and medium-sized rental companies. According to the American Rental Association (ARA), the top 10 equipment rental companies have about 35% market share, and the top 3 companies have about 25% market share.

The largest North American equipment rental companies include United Rentals , Sunbelt Rentals , Herc Rentals , Home Depot Rentals , and Ahern Rentals . The total annual industry sales are over $50 billion, and the long-term growth rate is about 5% per year.

Source: United Rentals and Equipment Radar Takeaway: The top three industry players have a 25% combined market share. This means the industry is very fragmented and comprised mostly of small and medium-size companies.

Source: United Rentals , American Rental Association (ARA) , Rental Equipment Register (RER) , and US Census Bureau Takeaway: The US Equipment Rental industry size is over $50 billion, with a growth rate of about 5% each year.

Source: United Rentals, ARA, RER, and US Census Bureau Takeaway: The US Equipment Rental industry has outgrown overall construction spending since 1997.

Equipment Rental Covers More Than Just Construction Machinery

Many equipment rental companies augment their equipment fleets to include general tools, HVAC, power generation, and event (party, wedding, concerts, etc) equipment.

The ARA segments the rental industry into three primary categories:

• Construction and Industrial Equipment: This category primarily serves construction firms and contractors. Equipment typically includes earthmoving equipment such as excavators, loaders, backhoes and compaction machinery, light towers, aerial work platforms. This segment can also include road infrastructure, energy projects, commercial buildings, malls, demolition and more.
• DIY General Tool Equipment: This category includes equipment typically rented by professional contractors and do-it-yourself (DIY) homeowners. Equipment includes small and light construction equipment such as power tools, air compressors, aerators, lawn tractors, compact tractors, skid-steer loaders and small excavators, etc.
• Party/Wedding/Event Equipment: This category includes equipment rented by consumers, homeowners and businesses for parties and events. Items can include tents, tables, chairs, lights, dance floors, decorations, linens, plates and glassware, portable restrooms, concession equipment, inflatables (moonwalks), and other furniture. Projects can range from large corporate events to small family gatherings.

When you start your rental company, you can choose to serve one or more categories. Many established rental companies offer an all-in-one stop rental offering. You should research your local market demand for each category to understand which suits your local market best.

Aerial lifts and earthmoving equipment tend to be popular categories for equipment rental companies. When you choose your categories, you should study the local rental rates, seasonality (demand fluctuates through the year based on weather and construction patterns) and competition.

Herc Rentals Equipment Fleet Mix

Source: Herc Rentals Takeaway: Large rental companies such as Herc Rentals have diverse fleets. Both United Rentals and Herc Rentals have placed increased focus on expanding into the specialty rentals category over the past few years.

Equipment Rental Customers

The equipment and event rental industry offers customers the opportunity to gain the benefit of using goods (from excavators and aerial lifts to party tents) for a defined time. Customers are attracted to rentals instead of purchasing equipment for multiple reasons, including:

• Control expenses and inventory
• Wide selection of equipment
• Professional customer care / service
• No need for maintenance or downtime
• Save on storage / warehousing
• Reliability
• Equipment tracking
• Conserve capital
• Manage risk

Customers can range from professional contractors who need aerial lifts for several months to an average homeowner who needs a stump grinder for a weekend project.

Steps to Starting Your Equipment Rental Business

1. business plan.

Every great business out there today started with a simple idea. To transform that idea from something imaginary into something real, you should make a business plan that outlines your strategy and thoughts. Writing a business plan is one of the best ways to force yourself to think about your business from many angles. It also is a helpful document to share with potential investors and lenders.

When you create your business plan, it is important to keep your expectations realistic. Setting goals and metrics too high at the beginning can lead to wasted time and money down the road. Remember that there are always unforeseen costs and challenges with any new venture, so it is prudent to bake in padding and leeway.

A typical business plan includes the following sections:

• Summary: Wait to write this at the end. This is the 30,000-foot view of your entire business plan summarized in a few paragraphs. This helps others understand the business plan without reading the entire document.
• Company Description: Write about what your company will do, who it will involve (you and any others), where it will be located, what kind of equipment you will buy for your fleet, what hours you plan on working, etc.
• Market Analysis: Understand the rental industry in your area. Get to know the rental rates in your area. Talk with people in the industry to understand who your main customers would include.
• Competitive Analysis: List out the competition, what they do, how big they are, and how you plan to offer a better value proposition.
• Product/Service Offering: Determine which types of equipment you will offer for rent. Also, make a road map of where you plan on expanding as your business grows. Will you offer parts and service too?
• Marketing Plan: Figure out how you will tell the world about your new company. Create social media pages and advertise in local publications. Make sure you add your business to online directories such as Google Maps and the Equipment Radar Directory so people can find it.
• Financial Plan: Spend a lot of time thinking about the capital resources you have to deploy and how you plan on deploying them. Most equipment rental companies borrow money from banks to make new and used machinery purchases. Figure out which lenders you can work with to buy your machinery.

2. Form Your Company

You should create a legal entity such as a corporation or LLC to separate your business interests from your personal interests. You must register your business with your state, pay a registration fee, and also register with the IRS . Once you have formed your company, you should open a bank account and deposit initial capital into it.

3. Purchase New or Used Equipment For Fleet

Many newly-formed rental companies start with just one used machine, and later they upgrade and expand their fleets over time. You can shop online for new and used equipment to buy your first equipment.

4. Create Safety & Risk Management Plans

Buy proper insurance to cover your business from accidents and injuries. Talk with your business insurer, so you understand what is covered and what is not covered.

Create safety guidelines for your shop, and teach employees how to handle the equipment safely. Make sure any dangerous areas in your storage or warehouse are safeguarded.

5. Organize Business Operations

Choose a store location. You will need enough space to store your equipment, an office area for you and other workers to work, a service area, a check-in/out counter to handle customers, and a showroom for equipment, accessories and more.

A nice-looking showroom can be a strong selling point for your business. It gives your customers an opportunity to look around and see what you have to offer. You should think of your showroom as your marketing platform.

6. Make Maintenance & Fleet Refresh Plan

You should pay close attention to the condition of your fleet. Inspect it after every rental, and perform both scheduled and unscheduled maintenance as needed. The top-performing rental companies typically have a systematized process to inspect, clean and renew equipment after it is returned from a job site.

As your equipment begins to age, you should consider selling your older equipment and buying newer equipment to keep your overall rental fleet relatively new. Large rental companies typically target an average fleet age of about 50 months (4 years old), which means that they sell equipment when it gets to be about 7-8 years old. Customers often prefer newer equipment that looks good.

Financial Planning

Rental rates.

Rental rates are often determined by local supply and demand for rental equipment in your area. Rates go up and down based on time of year, type of equipment and equipment condition.

Rental rate changes are very important to monitor. Each $1 change in rental rate is a $1 increase or decrease to the bottom line. When your rental rate changes, your other costs do not change much.

Typically most companies will provide daily, weekly and monthly rental rates. As the rental term extends, the average daily rate tends to go lower. Weekly and monthly rentals can often be more profitable for equipment rental companies even if their average daily rental rates are lower because there are not as many inefficiencies associated with them (transportation to and from the location, downtime for inspection and servicing, etc).

Utilization

Utilization is an important metric that you should watch carefully. Higher utilization typically means higher profitability. The equipment rental business is largely a fixed-cost business - your equipment, building lease, employee costs all stay about the same whether you have your equipment out on rent or not.

Utilization is a two-edged sword. If your utilization is too high and you do not have any equipment available for rent, then customers may be forced to go with a competitor. It's best to increase your fleet size if utilization goes too high, and reduce your fleet size if your utilization goes too low.

Seasonality

Construction tends to be very seasonal, depending on your geographic location. You should research the swings in seasonality to understand business trends during the busy summertime and slower wintertime.

Cyclicality

Equipment rental is susceptible to economic cycles. When the broader economy slows and construction pulls back, the demand for rental equipment also slows. Typically rental rates will soften or fall during a downturn.

Rental Industry Terms & Metrics

The industry uses several common terms to measure equipment fleets and financial performance. Below is a list created by the ARA to help you get acquainted with industry standards:

Original Equipment Cost (OEC)

Time (physical) utilization (tu), financial utilization ($u), fleet age (age), change in rental rate %rr.

Keeping a fresh fleet that is well-maintained and serviced is very important to managing customer relations and expectations. Typically rental companies will target an average age for the entire fleet. By regularly buying newer equipment and selling older equipment, the rental company can maintain a constant fleet age.

Below is a sample overview of United Rental's fleet statistics from its 2020 annual report :

Starting your own equipment rental company is within the realm of possibilities. Spend time researching your local market and creating a business plan, and soon enough, you will be ready to launch your new venture.

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Equipment Leasing: A Guide for Business Owners

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Leasing equipment can be cheaper in the short term than buying, but there are a few things you should know before you rent your equipment.

Table of Contents

Buying and maintaining equipment is expensive, and new equipment is coming out all of the time. Leasing equipment offers advantages that owning does not, including monthly rental payments and the ability to upgrade to the latest equipment as it comes out. 

If your business needs new equipment or technology but you can’t afford to buy it outright, leasing may be an option to consider. However, leasing could be more expensive in the long run, making it a tough decision for many businesses. This guide explains how equipment leasing works and what to consider when deciding whether to buy or lease equipment for your business.

What is equipment leasing?

Equipment leasing is a type of financing in which you rent equipment rather than purchase it outright. You can lease expensive equipment for your business, such as machinery, vehicles and computers. The equipment is leased for a specific period; once the contract is up, you may return the equipment, renew the lease or buy the equipment.

Editor’s note: Looking for information on equipment leasing? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need:

Equipment leasing is different from equipment financing – taking out a business loan to purchase the equipment and paying it off over a fixed term with the equipment as collateral . In that case, you own the equipment once you pay off the loan.

With an equipment lease , the equipment isn’t yours to keep once the leasing term is over. As with a business loan, you pay interest and fees when leasing equipment, and they’re usually added into the monthly payment. There may be extra fees for insurance, maintenance and repairs.

Equipment leasing can be much more expensive in the long term than purchasing equipment outright, but for cash-strapped small business owners, it’s a means to access necessary equipment quickly.

How does an equipment lease work?

If you decide to lease equipment for your business rather than purchase it upfront, you enter into a lease agreement with the equipment owner or vendor. Similar to how a rental lease agreement works, the equipment owner drafts an agreement, laying out how long you’ll lease the equipment and how much you’ll pay each month.  

During the lease term, you use the equipment until the deal expires. There are cases in which you can break the lease – and these instances should be spelled out in the contract – but many leases cannot be canceled. Once the lease is up, you can often purchase the equipment at the current market rate or lower, depending on the vendor.

The rates you pay to lease the equipment vary by leasing company. Your business credit score also plays a role in the rates you’re quoted. The riskier you are in which to lend, the more expensive it will be for you to lease equipment. An equipment lease can be approved online in a few minutes. Leasing companies tend to specialize in specific industries, so it’s important to do your homework to find the right financing option for your business.

Equipment leasing terms are typically for three, seven or 10 years, depending on the type of equipment.

Equipment leasing is not a loan, which means it won’t show up on your credit report or hurt your ability to borrow. In many cases, the IRS lets you deduct your equipment lease payments if you’re using the equipment for your company. 

Benefits of equipment leasing

Leasing equipment offers many benefits to cash-strapped small businesses. While not all equipment leases are the same, and there are many ways to finance a lease, here are some advantages to leasing your equipment: 

• It’s cost-effective to get started. Many lessors don’t require a significant down payment.
• You can update your equipment. If you often need to update equipment, leasing is a good option because you aren’t stuck with obsolete machinery.
• It’s easier to scale. If you need to upgrade to more advanced equipment to handle a higher work volume, you can do so without selling your existing machinery and shopping for replacements.
• It may offer tax credits. Equipment leases are often eligible for tax credits. Depending on the lease, you may be able to deduct your payments as a business expense by taking advantage of Section 179 qualified financing deductions .

How to get started with equipment leasing

Before you start the equipment leasing process, answer the following questions. It may seem like a lot of effort upfront, but without answering these questions as they relate to your business, you can’t make an informed decision on leasing or buying equipment.

What is your monthly budget?

Leasing offers substantially lower monthly payments than purchasing, but you still need to factor the costs into your monthly cash flow. Start with what you can afford and work from there; don’t work the other way around by getting price quotes and trying to squeeze them into your budget.

How long will you use the equipment?

For short-term equipment use, leasing is almost always the most cost-effective route. If you’ll use the equipment for three years or more, a loan or standard line of credit may be more beneficial. Factor in your business’s growth too: If your company is rapidly growing and evolving, a lease may be a better option than buying.

How quickly will the equipment become obsolete?

Technology becomes outdated more quickly in some industries than others. Consider obsolescence before deciding whether buying or leasing makes sense for you.

Can the equipment be leased?

Equipment that qualifies for a lease is practically limitless. But there are a couple of conditions.

• Purchase price: Equipment leases enable your business to obtain equipment and machinery with a high dollar value. This includes costly single items – like heart monitors and extraction machinery – and smaller items needed in bulk, like kiosks, software licenses and telephones. For this reason, it’s uncommon to find a lease agreement for purchases under $3,000, and many large lenders require a minimum purchase of $25,000 to $50,000.
• Hard assets: The equipment you lease must be considered a hard asset – anything that could be listed as personal property and not permanently attached to real estate. Soft assets, such as employee training programs and warranties, do not qualify for lease programs.

Leasing vs. purchasing 

While many companies benefit from equipment leasing, an outright purchase is more cost-effective in some instances. When comparing purchasing and leasing options, consider these factors:

• Purchase price
• Amount to be financed
• Annual depreciation
• Tax rates and inflation
• Monthly lease costs
• Equipment usage
• Ownership and maintenance costs

Pros and cons of equipment leasing

A lease is ideal for equipment that routinely needs upgrading – for instance, computers and other electronic devices. Leasing gives you the freedom to obtain the latest machinery with a low upfront cost, plus with a fixed rate, you’ll have monthly payments you can budget.

At the same time, leasing provides a wider range of equipment options for businesses. Leasing makes it financially possible for you to afford equipment that would otherwise be too costly to purchase.

There are some drawbacks, though. Leasing requires that you pay interest, which adds to the overall cost of the machine over time. Sometimes, leasing can be more expensive than purchasing the equipment outright – especially if you purchase the equipment when the lease term has expired.

Additionally, some lenders enforce a certain term length and mandatory service packages. This can add to the overall cost if the lease term extends beyond how long you need the equipment. In this scenario, you could get stuck with a monthly payment and storage costs associated with unused equipment.

Pros and cons of buying equipment

When you own a piece of equipment, you can modify it to suit your exact needs. This isn’t always the case with a lease. Similarly, buyers aren’t bound by the limitations an equipment lessor imposes.

Purchases also enable you to resolve any issues more promptly because you don’t have to obtain approval from the leasing company to schedule a repair or order a replacement part. In addition to the depreciation tax benefits available through Section 179, you can recoup some money by reselling the equipment when you no longer need it.

Like leasing, purchasing has its drawbacks. The biggest is obsolescence; with a purchase, you’re stuck with outdated machinery until you buy new equipment. Also, market competitiveness and the availability of tax incentives with leasing are often enough to dissuade many business owners from purchasing equipment outright. The costs to maintain and repair machinery, plus a steep purchase price, may put too much of a financial strain on your company.

By some estimates, businesses budget 1 to 3 percent of sales for maintenance costs. This is a rough estimate, though. The equipment, service hours, ages, quality and warranty determine the actual maintenance costs.

Equipment leasing vs. other financing options

A purchase isn’t the only alternative to leasing. In fact, it’s not even the most common. Some of the best business loans can cater to your small business’s equipment needs. Lines of credit and factoring services are also popular ways to finance equipment acquisitions.

Business loans

Like a purchase, business loans provide more ownership of the equipment. With a lease, the lessor holds the title to any equipment and offers you the option to buy it when the lease concludes. A loan enables you to retain the title to any of the items you purchase, securing the purchase against existing assets.

Unfortunately, terms can be a loan’s major drawback. Unlike a lease, which provides fixed-rate financing, a loan or line of credit’s interest rate may fluctuate throughout the loan term. This can make budgeting problematic, depending on the size of the loan. Furthermore, banks and other lenders often require a much larger down payment – 20 percent of the total cost of equipment by some estimates.  

Invoice factoring

Factoring is another way to purchase costly equipment and is often faster than applying for a loan. By leveraging your accounts receivable , you can quickly turn outstanding payments into cash by selling these invoices to a factor. Factoring is an ideal alternative to leasing and loans for startups and small businesses, often paying up to 90 percent of the total value of your accounts receivable – depending on the creditworthiness of your customers.

Funding is usually available in a matter of days. This makes factoring a popular resource for smaller manufacturing operations, the transportation industry and businesses that routinely handle contracts with a fast turnaround. 

The leasing process: What to expect

When applying for a lease, you can expect the process to include these steps:

• You complete an equipment lease application. Be sure you have financial data available for your company and its principals, as this may be required upfront or after initially completing the application.
• The lessor processes your application and notifies you of the result. This usually happens within 24 to 48 hours of submitting the application. Some lessors may not require financials or a business plan for applications on dollar amounts ranging from $10,000 to $100,000. For financing over $100,000, expect to provide complete financials and a business plan .
• Once you receive approval, you must review and finalize the lease structure – including monthly payments and the fixed APR. You’ll then sign the documents and resubmit them to the lessor, typically along with the first payment.
• When the lessor has received and accepted the signed documents and first payment, you are notified that the lease is in effect and that you are free to accept delivery of the equipment and commence any necessary training.

Equipment lease types: Operating and finance

There are two primary types of equipment leases: operating leases and financial leases. Here’s a breakdown of both.

What is an operating lease?

An operating lease allows a company to use an asset for a specific period of time without ownership. The lease period is usually shorter than the economic life of the equipment. At the end of the lease, the lessor can recoup additional costs through resale.

Unlike an outright purchase or equipment secured through a standard loan, equipment under an operating lease cannot be listed as capital. It’s accounted for as a rental expense. This provides two specific financial advantages:

• Equipment is not recorded as an asset or liability.
• Equipment still qualifies for tax incentives.

Dealers’ rates may vary widely, but in general, the average APR for an operating lease is 5 percent or lower. Average contracts last 12 to 36 months.

With the prevalence of leasing, accounting regulations set in 2016 by the Financial Accounting Standards Board require companies to reveal their lease obligations to avoid the false impression of financial strength. 

In fact, all but the shortest-term equipment leases must now be included on balance sheets . While leased equipment does not have to be reported as an asset under an operating lease, it’s far from free of accountability.

What is a finance lease? 

Sometimes known as a capital lease, a finance lease structure is similar to an operating lease in that the lessor owns the equipment purchased. It differs in that the lease itself is reported as an asset, increasing your company’s holdings and its liability.

Commonly used by large companies – such as major retailers and airlines – this setup provides a unique advantage, as it allows the business to claim both the depreciation tax credit on the equipment and the interest expense associated with the lease itself. In addition, the company may choose to purchase the equipment at the end of a finance lease.

Given the financial edge this provides, the APR for a finance lease is higher. Standard interest rates are currently between 6 and 9 percent, while contracts range from 24 to 72 months.

Lessee responsibilities

Additional responsibilities can result in expenses above and beyond your monthly lease payment. These typically include the following items:

• Liability insurance: Average estimates for liability insurance range from $200 to $2,200 annually, with many businesses reporting costs of $1,000 or less.
• Extraneous costs: Depending on your lease structure, you may be held liable for some maintenance and repairs. Extraneous costs can include any legal fees, fines and certification expenses.
• Shipping charges: This includes transportation and shipping costs to return the equipment.
• Added fees: Read your contract carefully. Fees can be added for a one-time documentation fee (which is sometimes as much as $250) or late payments (which run from $25 to 15 percent of the amount overdue).

Comparing equipment finance providers

Given the costs and considerations we’ve addressed, comparing several lease providers is essential to ensure you get the best rate. Before beginning your search, you familiarize yourself with these three types of equipment finance providers and the benefits each provides:

Lease broker

A lease broker serves as an intermediary between you and any prospective lessors. The broker will present you with the offers and submit your requests for financing, handling much of the paperwork for you. 

Brokers represent only a small segment of the leasing market, and their services do not come cheap. Brokers reportedly charge 2 to 4 percent of the equipment cost to negotiate a deal. 

The benefit of using a broker is realized in their extensive relationships. Often industry-specific, they specialize in obtaining a wider range of equipment, sometimes at better prices than would be available through standard channels. 

Leasing company

A leasing company is often the subsidiary leasing arm of a manufacturer or dealer. Also known as a captive lessor, a leasing company’s sole aim is to facilitate leases with its parent company or dealer network. For this reason, you will usually deal with a leasing company only when working directly with a manufacturer.

Independent lessor

An independent lessor encompasses all third-party lease providers. Independent lessors include banks , lease specialists and diversified financial companies that provide equipment leases directly to your business. They differ from leasing companies in that they typically specialize in equipment remarketing, a skill that enables them to group products from multiple manufacturers and offer more competitive APRs.

Tips on choosing a lessor

The best advice for choosing a quality lessor is to examine the company with the same level of scrutiny with which you and your company are being scrutinized. Give preference to those willing to partner with your firm. This may be represented in the level of background and experience they have in relation to your line of business or their willingness to work with you on certain terms. 

Some fees specified under the lessee’s responsibilities – particularly application fees and late fees (at least on the first late payment) – may be covered or waived altogether depending on the lessor.

Also, take time to research some key items about the lessor.

• Business information: Look into the lessor’s payment history, credit history, business summary, corporate relationships, financial statements and any public filings.
• Pending litigation: Search public records for any notices of pending litigation.
• Payment system: Is it simple, or does it require mountains of paperwork?

Questions to ask a dealer

Before choosing a dealer, get price quotes from at least three companies, and ask all the dealers on your list these questions. Asking the right questions is half the battle for getting a fair deal for your company’s services and goods.

• How much money is required upfront? Lease financing often provides 100 percent of the dues required for an equipment purchase. Loans do not, often requiring up to 20 percent of the total as a down payment. If a down payment is required, consider reassigning capital to cover any upfront costs.
• Who takes advantage of the tax incentives? Under a loan structure, your company can claim depreciation. However, you will have to provide a down payment, and the interest rate is higher. Under a lease, the lessor claims depreciation. In exchange, it offers a lower APR – often half that of a loan. If the depreciation credit is important to you and you still want to lease, ask about the availability of finance or capital leases.
• Are the financing terms flexible? Leasing is often viewed as the most flexible financing option, especially compared to loans. Depending on the lease structure, you can start with low payments and increase them as time goes by (known as a “step-up lease”), defer payment to give yourself an extra window before the first payment is due, and even add more equipment onto an existing lease under a “master lease” structure.

Lease-to-own agreements

If you’re interested in keeping the equipment you lease for your business but don’t have the cash to purchase it or the credit to qualify for a traditional loan, consider a lease-to-own option. Lease-to-own agreements require businesses to make scheduled payments for a specified time frame before gaining ownership of the equipment.

A lease-to-own agreement has four primary components: 

• The lessee enters an equipment leasing agreement with the option to purchase at the end of the contract.
• The lessor applies a percentage of each payment to the equipment’s purchase price.
• At the end of the contract, the lessor pays the remaining balance to gain ownership of the equipment.
• If the lessee decides not to purchase the equipment, payments made and equipment are forfeited to the lessor.

It’s important to note that if you enter a lease-to-own agreement, your business will likely pay a price above fair market value for the equipment. On the other hand, once payments are made, your business has complete ownership of the equipment. 

Typically, lease-to-own contracts last the same amount of time as other equipment leasing agreements. The main difference with an equipment leasing option is that a percentage of your payments is applied to the equipment’s purchase price. If a business can’t purchase the equipment at the end of the contract, the lessee may, in most instances, request an extension, ask for a renewal or opt to return the equipment. 

While a lease-to-own situation may be convenient for many small business owners, it’s not without risks. If your company isn’t capable of purchasing the equipment at the end of the agreement, you forfeit the equipment and all payments, which can be a major financial loss for a small business. The most important factor in this type of agreement is to consistently communicate with your lessor and ask to renegotiate time frames if necessary. 

Lease-to-own agreements are best for heavy machinery, production equipment or any other type of equipment your business would typically need a traditional loan to purchase. 

To lease or buy equipment is a key consideration

Depending on your budget and circumstances, leasing your equipment may offer your business important advantages. However, there are drawbacks, such as higher costs over time, interest payments and lack of control over the equipment. It can help you reduce maintenance costs and stay up to date with the latest equipment, though, since you won’t be sinking a lot of money into a piece of equipment you can’t easily replace. Consider all of these factors before leasing or buying new equipment to set your business up for success.

Tejas Vemparala and Dachondra Cason contributed to this article.

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Equipment Leasing Business Plan

Published Jul.05, 2023

Updated Apr.22, 2024

By: Jakub Babkins

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Table of Content

1. What Is Equipment Leasing?

Equipment le­asing provides businesses with a financing option to obtain the necessary equipme­nt for their operations without the commitme­nt of purchasing it. This arrangement allows businesses to utilize the equipme­nt for a specific duration, ranging from a few months up to five ye­ars or even longer in some cases.

The lease agreement typically involves the business paying a fixed monthly amount over the lease term that covers the equipment cost and interest. The business then can either return the equipment to the leasing company at the end of the lease term or purchase it for a predetermined price.

2. Executive Summary

Why do you need a business plan for the equipment leasing business.

When e­mbarking on the journey of establishing a thriving e­quipment leasing business, crafting an impe­ccable business plan assumes paramount importance. Moreove­r, it encompasses a thorough competitive­ evaluation alongside a meticulously de­vised marketing strategy. Moreover, esse­ntial information regarding key personne­l is also provided within this crucial blueprint.

The small e­quipment leasing business plan te­mplate serves as a vital organizing document with multiple functions.

How to write an executive summary for an Equipment leasing business plan?

The Executive Summary is the most important element of your equipment leasing business plan sample, like the Car Rental Business . It should detail your objectives, key target markets, competitive advantages, and how your leasing business will provide value to your customers.

Specifically, the Executive Summary should include the following:

• Company Information: State the company’s name, its legal structure and ownership, contact information, and the location of the leasing business.
• Objectives: Describe the company’s goals and ambitions.
• Description of the Business: Explain why your leasing business is needed and distinct from its competitors, and provide an overview of the services you offer.
• Target Markets: Identify and profile the key customer segments.
• Competitive Advantages: Describe how your equipment leasing business will differentiate itself from its competitors.
• Financials: Summarize the financial projections for the business and describe the amount of funds needed to get the business off the ground.

3. Company Overview

History of the equipment leasing company.

Equipment leasing is one of the world’s oldest and most well-developed financing types. The company that this business plan is for is a long-standing financing provider with over 25 years of industry experience. Over time­, the company has solidified its position as a leading provide­r of both short-term and long-term equipme­nt leasing plans. Additionally, it has successfully exe­cuted numerous sale-le­aseback transactions.

The company, similar to the Tent Rental Business , primarily focuses on offering financing solutions to small and medium-sized businesses. It provides a range of financing options to its clie­nts, including dollar and percentage le­ases, capital leases, sale­-leaseback transactions, master-variable­ rate agreeme­nts, and lease line agre­ements. In addition to this, the company also offers consulting services that help clients compare different e­quipment types, suppliers, and costs. This helps them make informed decisions before entering into any financial contracts.

The improved version of the sente­nce is as follows: The company takes pride­ in its deep understanding of comple­x financial instruments associated with equipme­nt leasing, its commitment to exce­ptional customer service, and its capacity to de­velop and offer tailor-made solutions for e­very client. [related_business_plan id=”515″ layout=”horizontal”]

The mission is straightforward: to offer customers the best financing solutions. Their aim is to excel in the industry by providing customize­d and user-friendly options for restaurant e­quipment leasing and other ne­eds.

4. Products and pricing

• Cash Flow Financing: term lengths ranging from 24 months to up to 30 years, depending on the asset type, value, and specifics of the transaction. Upfront payments are similar to other equipment leasing options.
• Operating Leases: short-term leases with terms ranging from 1-5 years. No upfront payments are required.
• Percentage or Fair Market Value Leases: term lengths ranging from 1-5 years with fair market value buyouts at the end of the term. There is no upfront payment required.
• Sale-Leaseback Transactions: term lengths ranging from 1-3 years. Upfront payments are required, and these transactions depend on the asset’s value at the beginning of the term.
• Master Variable Rate Agreements: variable rate financing programs that adjust monthly payments based on the changing interest rate environment. Generally, these agreements are paired with a fixed-rate option.
• Lease Line Agreements: agreements in which the lessee is pre-approved for periodic borrowing up to an established credit line. Payments are determined based on the borrowing amount, and terms range from 12-24 months. Upfront payments are not required.

5. Customer Analysis

Customer segmentation.

The customer base of business plans for equipment leasing consists primarily of businesses that need access to specific pieces of equipment to remain operationally competitive but lack the capital to purchase the equipment outright. Generally speaking, the customer segmentation within the equipment leasing market is structured broadly as follows:

• Large business sector: The leasing market mainly focuses on large business operations, such as major corporations and government entities. They tend to have ample access to capital and thus are able to negotiate lower leasing rates, more comfortable repayment terms, and additional benefits (i.e. more lenient maintenance requirements).
• Small and medium business sector: This segment consists of smaller businesses with fewer resources and tighter budget constraints. As such, these businesses should be offered more attractive leasing packages that include lower deposits, more flexible repayment periods, and additional pre-payment incentives.
• Non-profit and charitable organizations: Non-profits and charitable organizations typically lack access to a traditional credit rating system and thus cannot access the more competitive leasing contracts available to larger, more established businesses.

6. SWOT Analysis

SWOT analysis is a strategic planning tool utilize­d to evaluate the stre­ngths, weaknesses, opportunitie­s, and threats of a business, like in the­ case of Mortage Broker Busine­ss Plan . Strengths refer to inte­rnal factors that grant a business an advantage, while opportunitie­s denote exte­rnal elements that offe­r potential advantages. Weaknesses represent the internal factors that pose a disadvantage, and threats represent the external factors that pose a disadvantage.

• Experienced and knowledgeable staff
• Ability to provide attractive and competitive rates
• Established relationships with creditors and lenders
• Strong customer service record
• Lack of online presence
• Limited growth potential
• Lack of market exposure
• Limited financial resources

Opportunities

• Expansion into new markets
• Offering customized leasing options
• Utilizing relationships with creditors and lenders to secure better deals
• Developing an online presence
• Rising competition in the leasing industry
• Changes in consumer demand
• New regulations and laws
• Unexpected economic downturns

7. Marketing Analysis

Competitors.

Competition in the equipment leasing industry is fierce as several large financial institutions are offering competitive leasing services and rates.

he industry’s le­ading competitors encompass Wells Fargo, US Bank, SunTrust Bank, Bank of Ame­rica, BB&T, BBVA Compass, and PNC Bank. These institutions offer dive­rse leasing options and possess a robust brand pre­sence.

Market trends

Rece­nt developments in the construction equipment leasing industry have been strongly influenced by advancements in technology and innovation. As technology continues to progress, leasing companies are now offering specialize­d services for cutting-edge­, technology-intensive e­quipment.

Competitive Advantage (USPs)

The company’s compe­titive advantage stems from its fle­xible leasing options, personalize­d services, and specialize­d solutions. Additionally, they leverage­ established partnerships with a range of equipment suppliers to ensure clients receive optimal leasing arrangeme­nts.

8. Marketing Plan

The marke­ting plan of the equipment le­asing broker aims to showcase their business capabilities to potential clients. This plan will primarily focus on two core­ areas: digital marketing and traditional, offline marketing.

Digital Marketing

For digital marketing, they will leverage websites, social media platforms, and email campaigns to reach potential clients.

Offline Marketing

For traditional, offline marketing, they will be looking to leverage connections in the industry to promote their business.

Promotions Strategy

The promotions strategy has the aim of increasing awareness and generating service­ leads. It utilizes a combination of online and offline­ tactics to connect with potential customers. To enhance lead gene­ration, promotional campaigns are employed, which include discounts, free trials, and refe­rral programs. Additionally, customer loyalty programs offer bene­fits such as discounts and rewards in order to incentivize­ repeat business.

9. Management Team

Organizational structure.

The management team for the equipment leasing business plan consists of the following personnel:

• Chief Executive Officer
• Chief Operating Officer
• Chief Financial Officer
• Chief Marketing Officer
• General Manager
• Business Development Director
• Location Manager

10. Financial Plan

Startup costs.

To launch a heavy equipment leasing business, it is estimated that the following startup costs are required:

• Business registration: $500
• Liability insurance: $500
• Office rent: $2,000
• Equipment: $10,000
• Business licenses and permits: $500
• Legal and accounting services: $2,500
• Business stationery and supplies: $1,000
• Furniture: $3,000
• Office equipment: $2,000
• Miscellaneous: $2,000
• Advertising and Promotion: $1,000

Total startup costs = $24,500

Financial Projections

Below are the key assumptions that have been used to project the financial performance of the equipment leasing business:

• Annual lease rate of 8%
• Monthly lease payments of 1/12th of the total lease amount
• Overhead costs of 10% of annual revenues
• Lease portfolio of $300,000
• The collection rate of 95%

Below is a table outlining the financial projections for the equipment lease business plan over three years:

• Revenue: $36,000
• Operating Expenses: $3,600
• Net Profit: $32,400
• Revenue: $40,800
• Operating Expenses: $4,080
• Net Profit: $36,720
• Revenue: $45,600
• Operating Expenses: $4,560
• Net Profit: $41,040

Funding Ask

The funding asks for the equipment leasing business is $24,500. This capital will cover the initial startup costs, such as business registration, liability insurance, office rent, equipment, business licenses, and so on. This amount is required to launch and get the business off the ground.

11. Why Choose OGS Capital’s Equipment Leasing Business Plan Writing and Consulting Services?

Very professional.

Had a great experience with OGS, especial ly Alex. Understood exactly what I wanted and did the job when promised. I was little skeptical about them at first but they definitely were amazing. Very happy with the work. I highly recommend them!

OGS Capital specialize­s in providing strategic equipment le­asing business plan planning services to e­ntrepreneurs and business owners seeking to optimize­ their resources. Our te­am of experience­d business consultants boasts a wealth of knowledge and expertise in the­ equipment leasing industry, accumulate­d over the course of a de­cade. We have successfully crafted comprehensive­ business plans for numerous leasing companies, witnessing their remarkable­ growth and ultimate success.

The e­quipment leasing industry’s specific requirements are we­ll understood by us. We provide­ efficient, effective, and appropriate solutions that cater to the needs of all parties involve­d in order to ensure se­amless operation.

Q. What is the easiest way to finalize an equipment leasing business plan?

The easiest way to finalize an equipment leasing business plan is to compile all the required components into one document. This document ought to contain several key components. Firstly, it should include an executive summary, which provides a concise overview of the entire plan. Secondly, it ne­eds to have a detaile­d description of the products or services being offered, providing compre­hensive information about their fe­atures and benefits.

Q. Where can I download the equipment leasing business plan in PDF format?

You can find a free, comprehensive Equipment Leasing Business Plan in PDF format from Score.org.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Starting an Equipment Rental Business – A Complete Guide

• November 28, 2023
• Azeem Ashraf

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The equipment rental industry is expected to reach USD 58.49 billion by 2029, up from USD 42.64 billion in 2022. The constant industry growth means it is ripe for investment. Creating a robust plan can help you start your business in this industry today. 

If you are looking to start your own equipment rental business, there are numerous aspects to consider before you jump in. From finding the right niche to targeting the right audience, and from buying the right equipment to marketing it correctly – we cover every step. 

Here are 7 steps for you to follow to get your equipment rental business up and running : 

1. Get started with your equipment rental business 

The first step towards starting your equipment rental business is to understand the market, industry, and technical jargon. Get the idea down on paper or create a digital mindmap to get a clear picture of the business roadmap. Connect all the relevant dots to verify your idea and its realistic implementation. 

Conceptualize and refine your idea 

Once you have the first machine rental business idea drafted, sit down to refine it further. Funnel it repeatedly through different filters like industry saturation, niche saturation, local competition, etc. This will help you refine the exact idea that will work best for you. 

Here are a few tips that will help you: 

• Find the right equipment 

You can find different types of equipment to rent out for different purposes. For instance, if you have enough capital, you can build a fleet of heavy construction equipment like bulldozers, loaders, etc. You can also get portable and handheld equipment like drills, chainsaws, etc. that cater to a specific industry. 

You can buy everyday tools and equipment to rent out to customers in your neighborhood. So, choose the equipment that you are well-informed about as having ample information will help you at every step of the equipment lifecycle. 

• Target a specific niche

Find a niche within the umbrella of the equipment rental business that you either have some knowledge of or have experience in. This will give you a competitive advantage from the get-go. 

Some of the popular niches in equipment rental are: 

• Construction equipment 
• Heavy equipment 
• Tools and small equipment 
• Machinery equipment 
• Road equipment 
• Dumpster rental equipment
• Lawn and garden equipment
• Carpentry or metalwork equipment 
• Determine the demand 

The next step is to research the demand in the market you are targeting. Make sure that you choose the right equipment rental business that has ample demand. For instance, if you are in a small city or town, you can offer a one-stop-shop rental solution. 

Get everything under your roof, buy equipment that is used regularly, and sign an agreement with other vendors for low-utilization equipment. If your city or town is rebuilding its infrastructure, you can primarily, offer construction equipment. Research what is in demand and stays in demand for a good chunk of the year. 

• Identify gaps and opportunities 

Once you know what equipment you will be renting out, find your competitors. Research them. Find out any business gaps that you can fill in. For instance, their business may not have specific high-utilization equipment, or maybe it is always rented out. Find these gaps and fill them in. As the saying goes, if you can’t beat them, join them. 

So, find partnership opportunities with competitors. If they have a high-revenue customer that they can’t fulfill the demand for, step in and become their vendor. There are always multiple opportunities that can be utilized to stand out from the competition. Find them and use them to your advantage. 

Equipment rental industry terms and metrics 

Every industry has its unique jargon which has evolved over time to be commonly used and understood by those belonging to that industry in the equipment rental industry, this jargon has officially been listed by the American Rental Association (ARA) to keep the industry standardized. 

Here are a few terms and metrics you need to be aware of: 

• Original Equipment Cost (OEC)

OEC measures the size of a rental fleet expressed in a base currency. Consistent with the concept of gross book value under U.S. GAAP, it represents the undepreciated cost of acquiring a piece of equipment.

• For assets bought off lease, OEC represents the cost paid to buy out the lease 
• OEC includes the cost of any refurbishments that can be capitalized under U.S. GAAP
• Time (Physical) Utilization (TU) 

TU is the time an equipment unit is rented divided by the total time available. Fleet-wide TU is weighted by OEC and is a measure of fleet efficiency expressed as a percentage of the time the fleet is on rent.

• TU per equipment unit = (OEC on rent during the period)/(Total OEC for the period)
• Financial Utilization ($U)

$U is a function of annualized rental revenue exclusive of ancillary fees weighted by OEC. 

• $U is calculated by dividing ‘pure’ rental revenue by the average OEC 
•  ‘Pure’ rental revenue excludes ancillary fees such as environmental fees, damage waivers, delivery charges and re-rent revenue
• Fleet Age (Age)

Age is the OEC-weighted average age (expressed in months) of the equipment in the fleet.

• The in-service date is used to calculate fleet age 
• No adjustments for refurbishments
• Change in Rental Rate (%RR) 

The period-over-period change in rental rates measures the change in average contract rental rates. Rates vary depending on contract type (daily, weekly, or monthly) and the equipment rented. 

• When reporting period-over-period rental rate changes, rental companies measure the average change in contract rental rates weighted by the prior period revenue mix

(These terms have been taken directly from the ARA Rental Market Metrics ) 

2. Research your market and locality 

Conducting a detailed analysis of your target market and locality will give you meaningful insights that will help you make informed decisions about your equipment rental business. Analyze and understand the competition to effectively offer better rentals to your customers. 

Do an in-depth analysis

This is where pen and paper or a digital notetaking app will help you. Write down everything your competitors are offering, learn how they offer it, what prices they have, and how they’re able to retain their customers. These small details will significantly help you in the long run. 

Take these steps to set up Northstar for your equipment rental business: 

• Conduct thorough market research

In in-depth market research, try to find your competitors locally, county-wide, and in your state. The wider your scope of research, the more insights you will get. Keep in mind that if you’re starting a heavy equipment rental business, you may have to shorten the radius since logistics will be an important financial aspect to consider. However, you can bypass that by offering delivery and pickups as an additional service. 

• Analyze pricing strategies

The next step will be to check the average pricing for the equipment you are planning to rent out. The price may vary depending on factors like availability, time of the year, weather conditions, etc. For instance, the weather-specific equipment will be priced differently during high-utilization and low-utilization months. Consider all factors before finalizing the pricing for your equipment. 

• Figure out your USP 

The unique selling point (USP) of your business will be the decisive factor for customers to come to you rather than your competitors. So, stand out among the competition with a meaningful USP. For instance, you can offer to rent during days when all other competitors are closed. You can add extra services such as logistics, on-the-spot maintenance of your equipment, etc. Find something that solves crucial challenges your customer base is facing. 

3. Plan your equipment rental business 

The next phase in starting your construction rental equipment business is to plan it in detail. Take the initial concepts to the next stage. Define a future-proof business plan, estimate and set budgets, and keep all financial aspects in mind. 

Chalk out a future-proof business plan 

If you want to future-proof your business, you start with a roadmap that accounts for all factors that may affect your operations. You will have to define a proper business plan including deep dives into operations, finances, and marketing. 

Here’s what to do: 

• Detail the business plan

Outline a business model that covers all aspects of your operational workflows. Understand how your business will operate, which equipment rental software to use, what a single workday will look like, etc. From day-to-day operations to monthly reporting, and from quarterly projections to yearly goals – write down everything. 

• Define business goals for your target market

Once you have your unique value proposition in place, you will have a clear picture of what your business goals should be. Consider your target market. If you’re targeting construction equipment rentals, what value will your rental business provide to construction companies?

 If you are starting a small equipment rental business, why should your community come to you instead of buying their own? Have clear goals regarding what you want to achieve, and highlight the value you’ll add for your customers.

• Outline marketing strategy 

Once your business plan is ready, you will then have to figure out how you will market it to your customer base. Define a few ideal customer profiles (ICPs) that will help you provide more value to individual customers. For instance, if you are a small equipment rental business, one of your ICPs may be a hobbyist who enjoys making wood furniture as a side gig. Define your ICPs and market your business around them. 

Set a budget for your equipment rental business 

Once you’re done with the business plan, move on to budgeting your rental business. This will help you forecast all kinds of financials you need to be aware of. A robust financial plan will include equipment, startup, leasing, permits, insurance, logistics, marketing, and operational costs. 

These tips will help you create a solid financial plan: 

• Calculate all initial business costs 

Anticipate and note down every kind of cost that you will have to bear from the start of your rental business to when it’s operational. If there’s anything you think will have a price attached to it, note it down. It is always better to be prepared. 

• Identify operational costs 

It is important to be aware of all costs associated with running your equipment rental business. Depending on the type of equipment you offer, you will have to consider the cost of regular maintenance, servicing, repairs, and even breakdowns. Have a strategy in place to recover damages easily. Include costs for rental software, staffing, overheads, and marketing in operations as well. 

• Set revenue targets 

Once you have decided on the rental prices for your equipment, it will be easier for you to forecast your regular expected cash flow. Set revenue targets for every quarter and plan your business strategies accordingly. It is easier to set a revenue target first and then try to achieve it rather than jumping in and hoping for the best. Revenue targets will help you align your marketing and rental strategies. 

• Review quarterly and align 

Consider the first year of your rental business as a trial period. You will be testing out various strategies to find the one that works for you. Schedule weekly, monthly, and quarterly reviews to nudge your business in the right direction. This is crucial. 

Highlight what is working for you, what can be improved, and what needs to be eliminated. If you’re using holistic rental software , it will highlight which equipment is performing well and which has low utilization. You can add and subtract equipment to your rental assets to retain and increase revenue every quarter. 

Financial aspects to keep in mind 

For an equipment rental business, there are a few key financial aspects that you need to consider. These can easily make or break your business. Think them through properly, and come up with a strategy customized for your rental business and your customers. 

Here are the crucial financial metrics to consider: 

• Rental rates

You can set your own rental rates for your equipment depending on the market, locality, demand, and customers. The rental rate for one specific piece of equipment will also vary depending on its type, the time of year, and the condition of the equipment. Generally, all equipment rental businesses offer a daily, weekly, and monthly rate. As a rule of thumb, the longer your equipment is rented, the higher the profit will be, even if the daily rate for that period is lower than the average daily rate. This is because you will have fewer costs added to it like maintenance, downtime, and delivery and pickup. 

• Utilization 

Keep in mind that equipment with high utilization will always yield a higher profit. But to cater to this high demand, you have to add more rental equipment to fulfill the demand. You can very easily lose business to a competitor if your high-utilization equipment is frequently unavailable due to being rented out or maintenance. Your competitors will happily jump in to fill this gap for your customers. 

• Seasonality 

Depending on where your business is located in the States, you have to consider seasons as a factor that will affect your rental business. The summer months are usually busier and the winter months are slower. You can add a wide range of equipment to cover both seasons. For instance, you can offer construction equipment during the summer and winter equipment during the snowy months. 

4. How to buy the right equipment for your business 

When buying equipment for your rental business, ensure that you get the best deal. The condition and durability of your equipment will determine how successful your rental business will be. Buy, lease, and get what your customers need. 

Think through the equipment purchases 

There can be multiple ways you can populate the assets and inventory of your equipment rental business. You should always get the best bargain via payment options that suit your needs and budget. 

Here’s what to look for: 

• Choose to lease or buy the equipment 

If you have enough capital to buy all the necessary equipment at the beginning of your business journey, go ahead and buy it all. If not, you can segment your equipment purchases into high-utilization and low-utilization, and buy the former first and buy the latter down the line. If you’re low on capital, leasing can be a great option to minimize startup costs. You won’t have to dip into too much capital upfront. 

• Find out the value of individual pieces of equipment 

Evaluate every single piece of equipment to assess its utilization level and profit margin. This way you’ll be able to get the right tools that get you the revenue you want to achieve your fiscal targets. Keep in mind that high-value equipment usually has regular high maintenance costs as well. If you’re only starting out, you can avoid the high-value equipment for the initial 3 to 6 months. As your business grows, you can buy those as well. 

• Buy the equipment your customers need 

Another best practice is to customize your equipment purchases to cater to the needs of your customers. Rather than buying the equipment you want, you can buy the equipment your customers need. That way, you will ensure regular bookings and rentals for your assets. 

Get the best possible deals 

Let your bargaining prowess shine through when you go out to buy the equipment you want for your business. It’s a simple game of getting the best deal possible after searching for what’s available in the market and for how much. 

Here are a few tips that will help you get the right equipment: 

• Get rates locally and online 

Although the same piece of equipment may be available at different prices in different States, you should always be aware of the price differences. First, go out into your local market, browse through the vendors, and compare prices there. Then, tally these prices with online stores even if they’re not from your own State. 

This will set a good baseline price for you. When comparing prices, include shipping costs, wherever applicable, in the overall price. Logistically, heavier equipment will be cheaper to buy locally, but you may get a better deal online for small equipment. 

• View warranties and reviews beforehand 

To make an informed decision when purchasing equipment, make sure you compare not only the prices but also the warranties offered. If you are buying equipment you personally have not used before, it is better to read customer reviews in depth, especially for high-value equipment. Chances are that a similar piece of equipment from two different manufacturers may have different longevity and durability. Also, dive deep into the troubleshooting forums of high-value equipment to find out if customers have faced a similar maintenance issue with certain equipment. It’s good to know all this before making a bad investment. 

• Buy in bulk or ask for further discounts 

Lastly, if you are purchasing more than one piece, buy it in bulk as it will reduce the overall cost. Find wholesalers who may be able to get you a better deal. Even if you are buying from a retailer, don’t shy away from asking for a further discount. Build good vendor relationships from the start. Let your vendors know you are here for the long run. It will help in creating a lasting customer relationship with them. 

Increase the lifecycle of your equipment 

Once you have bought the equipment you need for your rental business, the next step is to ensure that you increase their lifetime value. Your equipment will be your bread and butter, so make sure you maintain, service, and repair regularly. Well-maintained equipment will have zero to low downtime since it will keep on running like a well-oiled engine. 

Follow these tips to ensure longer equipment lifecycles: 

• Schedule and perform regular maintenance and inspections 

Great rental software will help you create regular maintenance checkups for your equipment. You can also schedule inspections to check if there is any problem that needs fixing. For heavy construction equipment, you will have to change oil, filters, etc. Maintain a way to schedule these regularly. A best practice is to fix a timeline or use the odometer readings. For instance, you can plan maintenance after every 100 hours or every 100 miles. 

• Track and analyze maintenance, servicing, and repairs 

Keep track of all your maintenance, servicing, and repairs to quickly assess the health of your equipment. Vehicles and construction equipment that have been cleaned, maintained, serviced, and repaired on time will always have a higher probability of being rented out frequently. Analyze your maintenance, schedule accordingly, and minimize your costs. 

• Provide necessary guidelines or train customers 

Most equipment breakdown happens when the equipment is not handled properly. To ensure that this doesn’t happen, provide guidelines to your customers on how to correctly operate and use the equipment. If your customer is a first-timer, you can offer to train them on the equipment, for free or with an additional charge. Always be available for support in case an experienced customer faces a mechanical breakdown while using your equipment. 

The best equipment to rent 

To get an idea of which equipment you should buy for your equipment rental business, you can browse this list. These items are utilized regularly and are rented frequently:  

• Regular and mini excavators for excavator rental business
• Skid steers
• Wheel loaders
• Graders 
• Bulldozers 
• Track loaders 
• Multi-terrain loaders 
• Wheel excavators 
• Trailers 
• DIY and everyday tools for small equipment rental business 
• Equipment for machine rental business 
• Lawn and garden tools 

5. Prep your equipment rental business for the web  

After purchasing the right equipment for your business, you have to find the right channels to market it. If your target market is local, you can print out flyers and put up a billboard in a strategic location. Apart from this, you can leverage the power of the internet to increase your outreach. 

How to rent out equipment online 

You can use rental software to manage your rentals online. You can also create a website and webstore to redirect your customers to your online portal. Since the rental software is a turnkey solution, you’ll be able to kickstart your rental business from day one. 

Here are a few steps you can take to highlight your online presence: 

• Create a professional website and webstore 

Start with a professional website for your equipment rental business. Research the available options as some rental software comes packed with the ability to create a website or a webstore directly. You can populate your equipment assets onto the webstore so your customers can book rentals online. An online webstore will take your business to the next level by allowing your customers to check availability and rent instantly. You won’t have to worry about the time and costs involved in booking orders on a one-on-one call. 

• Integrate industry keywords and SEO 

Research your industry and competitors, and find out what your customers are searching for on all popular search engines. Once you have a list of keywords they are using, you can incorporate them into your website to achieve higher discoverability. The more eyeballs you get on your business website, the more customers you may be able to do business with. 

• Leverage social media to build trust 

In this time and age when everyone is present on social media, leverage it for your business. Be present where your customers are, and engage with them frequently. Resolve their issues there, inform them of discounts, attract them to your business, and build long-lasting relationships.  

Build your team 

For a business to successfully grow, you need to hire a team of specialized professionals who can help you in different aspects of your rental business. To reduce costs at the start, you can be a one-person-army and handle everything yourself. But if you want to grow, you will have to build a team. 

These tips will be useful in building a dream team: 

• Identify critical roles 

Find out what the critical roles are for your equipment rental business. You may not need the conventional roles a regular company has, or you may have the margin to merge two similar roles into one. Plan your business team accordingly. Whatever you can do quickly, do it yourself, whatever else remains, delegate it. You can take ownership of sensitive business roles and hire professionals for all other tasks. This is where powerful rental software will act as another member of your team by automating a high number of your rental workflows. 

• Empower your team with knowledge 

A great business owner takes a leadership role and enables their team to take ownership of their individual departments. Take time out to train your employees with the right tools and knowledge so they can handle everything on their own rather than escalating every minor issue to you. Train them on the rental software as well or get the help of the rental software company to get your employees onboarded quickly. 

6. Consider legal aspects from every perspective  

There are certain legal considerations you need to be aware of for your equipment rental business. Safeguard your business by getting relevant guidance online and from related authorities. You will have to get permits, licenses, insurance, etc. before you can actually start your business. Research online, visit helpdesks of relevant government agencies or get insights from similar businesses in your area. 

Create robust procedures 

To streamline your rental operations and ensure consistency in the quality of your business, get proper and robust procedures in place. Fill the gaps and cover all contingencies by creating a process for every rental business workflow. 

Here are a few guiding points to help you get started: 

• Write down comprehensive rental agreements, contracts, and policies 

Have proper rental agreements and contracts on your rentals. In all of your customer-business interactions before, during, and after renting out, get an agreement document signed. Write clauses in that agreement or contract to cover all your bases. If it is high-value equipment, you can get pre-booking agreements signed by your customers as well. Jot down comprehensive agreements that help your customer understand how and what action needs to be taken in case of a contingency. 

• Detailed inventory management 

Manage your rental assets efficiently via rental software to always know where every piece of equipment is and for how long. Your inventory management will ensure that you get the best ROI on every piece of equipment available at your rental business. 

• Streamlined logistics, pickups, and deliveries 

If you are planning on offering delivery and pickup services to your customers, you can charge them for this service. If you want them to manage this on their own, make sure that you have a few logistics companies at your disposal to offer to them. Build trust with logistics and ensure peace of mind knowing your equipment won’t be damaged during transportation. 

• Establish maintenance and servicing protocols 

Have proper protocols in place for checking in and out of your rental equipment. Ensure that regular cleaning, maintenance, servicing, and repair protocols are followed. The time you spend in creating these protocols will save you time and money you won’t spend on breakdowns and equipment downtime. 

• Power up with rental software 

Get equipment rental software to automate your workflows. A holistic software will include every workflow your rental business needs. These crucial workflows are order management, customer management, bookings, tracking, invoice management, recurring orders, sub-renting, documentation, analysis, custom reports, customer portal, rental webstore, and much more. Go with rental software that helps you automate as many of your workflows as possible. 

7. Launch your equipment rental business 

Finally, when you have taken all the necessary steps, get ready to launch your equipment rental business. Market it to your customers through the right channels, book orders, and let the equipment rental business begin. 

Happy renting!

Was this helpful?

Frequently asked questions, what construction equipment is rented out the most.

Some of the most rented-out pieces of equipment in construction rentals are; excavators and mini-excavators, bulldozers, forklifts and scissor lifts, dump trucks, backhoes, skid steers, wheel loaders, trailers, bucket trucks, and more These are some of the construction equipment that have the highest profit margins. All of these have high utilization as well which means that each unit may frequently be unavailable for rent unless you have a larger fleet.

How profitable is an equipment rental business?

The type of assets you have for rent will determine the profitability of your equipment rental business. If you have a fleet of high-value construction equipment, expect high profit margins. If you are primarily renting out tools and equipment for everyday DIY projects, the profit margin will be low. You can either mix and match your range of equipment to cater to every kind of customer or you can target a specific niche in your local market that has zero to low competition.

What is the most profitable construction machinery?

The most profitable construction machinery to rent out is wheel loaders. These come in various sizes for maximum flexibility. They can be transported with ease and the medium to small ones can be driven directly to a job (if the traffic laws allow it). This piece of equipment has a high profit margin as well with reasonable servicing costs.

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Equipment Rental Business

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How to Start an Equipment Rental Business

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on April 13, 2022 Updated on May 23, 2024

Investment range

$8,550 - $18,100

Revenue potential

$62,000 - $156,000 p.a.

Time to build

1 – 3 months

Profit potential

$50,000 - $125,000 p.a.

Industry trend

If you’re looking to start a business from home and make good money, an equipment rental business may be just the ticket. It’s a large and growing industry, expected to rebound more than 60% from a huge dip in 2020. Equipment rental offers all kinds of opportunities – from party equipment to large tool rental and heavy construction equipment. You’ll need to make an investment to get started, but you should start seeing a return relatively quickly. 

Before you start shopping for your items of choice, you’ll need to learn more about the business side of things. Luckily, this step-by-step guide details the entire process of developing and launching a successful equipment rental business. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

Starting an equipment rental business has pros and cons to consider before deciding if it’s right for you. 

• Good Money – Depending on the equipment, you can make hundreds a day
• Flexible – Run your business from home on your hours
• Minimal Labor – Pickups and drop-offs only
• Big Competition – Compete with companies like Home Depot
• Up Front Investment – Spend some money get started

Equipment rental industry trends

Industry size and growth.

• Industry size and past growth – The global equipment rental business was worth $53.2 billion in 2020, after more than a 60% decline from 2019 numbers.(( https://www.statista.com/topics/8063/equipment-rental-market-in-the-united-states/?#dossierKeyfigures )) 
• Growth forecast – The global equipment rental business is projected to grow more than 60% by 2023 to regain its 2019 total of more than $87 billion. 
• Number of businesses – In 2021, 10,873 tool and equipment rental businesses were operating in the US.(( https://www.ibisworld.com/united-states/market-research-reports/tool-equipment-rental-industry/ )) 
• Number of people employed – In 2021, the US tool and equipment rental business employed 27,798 people. 

Trends and challenges

Trends in the equipment rental industry include:

• More and more construction companies and builders are opting to rent large equipment rather than buy, which is good news for the equipment rental industry.
• The new infrastructure bill, which is driving the construction industry, is also expected to increase the equipment rental industry.
• DIY projects are trending, with homeowners attempting to do remodeling and repairs on their own, and these people tend to rent rather than buy tools and equipment.

Challenges in the equipment rental industry include:

• Evolving technology makes it necessary for equipment rental companies to periodically upgrade their equipment.
• New technologies are being used to track equipment, which is solving a consistent problem in the equipment rental business but is an added expense for rental companies to assume. 

How much does it cost to start an equipment rental business?

Startup costs for an equipment rental business range from $8,500 to $18,000, although the costs vary widely depending on the type of equipment. These calculations assume that you will start out with large tools such as chainsaws, tile saws, drills, power washers, and so on. Costs also include the down payment on a truck or van to transport your equipment. 

Be sure to have an equipment rental agreement in place that customers must sign, and it should include a liability waiver in case someone is injured by the equipment. Also, make sure that your equipment is properly insured. 

How much can you earn from an equipment rental business?

Daily rental rates for most smaller tools average about $40. Your profit margin should be about 80%. 

In your first year or two, you might have 10 pieces of equipment and rent six of them five days per week, bringing in more than $62,000 in annual revenue. This would mean $50,000 in profit, assuming that 80% margin. As your business gains traction, you could add 10 more pieces of equipment and rent 15 of them five days a week. With annual revenue of $156,000, you’d make a healthy profit of $125,000.

What barriers to entry are there?

There are a few barriers to entry for an equipment rental business. Your biggest challenges will be:

• The startup costs to purchase equipment
• The space to store your equipment

Related Business Ideas

How to Start a Tool Rental Business

How to Start a Self Storage Business

How to Start a Rental Property Business

Step 2: hone your idea.

Now that you know what’s involved in starting an equipment rental business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research equipment rental businesses in your area to examine their products, price points, and what rents best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a business that rents wet tile saws, or party supplies and party equipment like bouncy houses and karaoke machines.  

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as construction equipment or larger tools for the do-it-yourself-er.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your rental equipment

You’ll just need to determine what equipment you want to rent. You should specialize in a certain type of equipment so that you can focus on a certain target market. You might want to call construction or remodeling companies to see what they are most likely to rent.  Read how Lenny Tim innovated in the mobility scooter rental business and glean insights that could revolutionize your entrepreneurial approach.

How much should you charge for equipment rental?

Prices will vary based on the type of equipment that you rent. Check local market prices to make sure you’re competitive. You should aim for a profit margin of about 80%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will either be construction-related companies or homeowners. You should spread out your marketing to include TikTok, Instagram, Facebook, and LinkedIn. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a storage space for your equipment. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “equipment rental” or “tool rental”, boosts SEO
• Name should allow for expansion, for ex: “Premier Rental Solutions” over “Power Tools Rental Solutions”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Here are the key components of a business plan:

• Executive Summary: Summarize your equipment rental business’s goal to provide a wide range of quality, well-maintained equipment for short-term or long-term rental to various industries.
• Business Overview: Describe your business’s focus on renting out equipment such as construction machinery, event gear, or audio-visual technology to meet diverse client needs.
• Product and Services: Detail the types of equipment available for rent, including categories like heavy machinery, landscaping tools, party supplies, or audio-visual equipment.
• Market Analysis: Assess the demand for rental equipment, considering target markets like construction companies, event planners, or DIY homeowners.
• Competitive Analysis: Compare your rental offerings to other equipment rental businesses, focusing on your strengths like equipment variety, maintenance quality, or flexible rental terms.
• Sales and Marketing: Outline your strategy for attracting customers, including digital marketing, building relationships with industry professionals, or offering competitive pricing.
• Management Team: Highlight the experience and qualifications of your team, especially in areas like equipment maintenance, customer service, and business management.
• Operations Plan: Describe the process of equipment rental, from inventory management and maintenance to customer service and delivery logistics.
• Financial Plan: Provide an overview of financial aspects, covering startup costs, pricing strategy, and expected revenue.
• Appendix: Include supplementary documents such as equipment catalogs, maintenance records, or market research data to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to equipment rental. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your equipment rental business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding an equipment rental business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Licenses/Permits

Starting an equipment rental business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your equipment rental business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Rental 360 , EZ Rent Out , or Point of Rental , to manage your inventory, schedule, invoices, and payments. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.

Here are some powerful marketing strategies for your future business:

• Strategic Partnerships: Forge partnerships with construction companies, event planners, or other businesses that frequently require equipment, offering them exclusive deals or discounts for consistent rental agreements.
• Social Media Campaigns: Leverage platforms like Instagram and LinkedIn to showcase your equipment in action, share success stories, and engage with your audience by running targeted ads to reach potential customers in your local area.
• Referral Programs: Implement a referral program that rewards existing customers who refer new clients, encouraging word-of-mouth marketing and building a strong network of satisfied clients.
• Local SEO Optimization: Optimize your online presence for local search by ensuring your business information is accurate and consistent across online directories, making it easier for potential customers in your area to find you.
• Specialized Equipment Packages: Create bundled packages for specific industries or events, offering a convenient and cost-effective solution for customers who may need a variety of equipment for a particular project or occasion.
• Community Involvement: Sponsor local events, join community groups, and participate in relevant industry associations to raise awareness about your business and build trust within your community.
• Online Reviews and Testimonials: Encourage satisfied customers to leave positive reviews on online platforms like Google, Yelp, or industry-specific websites, boosting your credibility and influencing potential clients.
• Seasonal Promotions: Introduce seasonal promotions or discounts during peak periods when demand for certain types of equipment is higher, attracting more customers during specific times of the year.
• Educational Content: Create informative content, such as blog posts, videos, or webinars, that educates your audience on how to use different types of equipment safely and effectively, positioning your business as an industry authority.
• Customer Loyalty Programs: Implement a loyalty program that rewards repeat customers with discounts, exclusive offers, or priority access to new equipment, fostering long-term relationships and customer retention.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your equipment rental business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your equipment rental business could be: 

• Rent top-of-the-line tools for your DIY projects
• Why buy when you can rent everything you need for your party?
• Heavy construction equipment at great rates 

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an equipment rental business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in equipment rental for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in equipment rental. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an equipment rental business include:

• Drivers – equipment drop-offs and pickups
• General Manager – scheduling, inventory management, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

An equipment rental business is a great opportunity to start a company that can grow. You can run your business from home and make an excellent living. Start with small stuff, work your way up to larger items and someday your business could rival United Rentals, the largest equipment rental company in the world! 

Now that you understand the business of equipment rental, it’s time to head to the hardware store and start shopping so you can start your successful entrepreneurial journey.

• Equipment Rental Business FAQs

Yes, you can make good money from equipment rentals since your ongoing expenses will be low. The key is to purchase the equipment that people will be most likely to rent.

It is important to establish a maintenance schedule and set procedures for handling repairs, including regular inspections and preventative maintenance, as well as prompt response to customer complaints or concerns. 

Yes, it is possible to start an equipment rental business on the side, although it may require significant time and effort to manage both the business and your other commitments. It is important to carefully consider your available time, resources, and expertise, as well as the potential demand for your services and the competition in the market.

Renting out heavy machinery or specialized equipment may be subject to additional regulations and safety requirements, depending on the type of equipment and the industry in which it is used. It is important to research and comply with all relevant regulations and safety standards, and to ensure that your staff and customers are trained and educated on safe operation and handling of the equipment.

To increase customer retention for your equipment rental business, you can focus on providing exceptional customer service, including prompt response to inquiries and complaints, flexible rental terms, and personalized attention to each customer’s needs. You can also offer loyalty programs or incentives for repeat business, and regularly communicate with customers to stay top of mind and offer new promotions or deals. 

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Business Name
• Create a Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Licenses/Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Start Making Money!

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House of Projectors is a start-up service provider, renting LCD computer projectors to businesses.

Retail Property Sub-leasing Business Plan

Galerie de Beaute will be the first salon mall in the state, sub-leasing mini-salon units to hairdressers, nail technicians, aestheticians, and massage therapists.

Tools Rental Business Plan

Borrow My Tools is a start-up company serving the San Mateo, CA community with home improvement tools for lease or rental.

Starting an equipment rental business makes a ton of sense in today’s world. With a trend towards minimalism and reducing environmental impact, allowing customers to rent the equipment they need versus purchasing outright is a win-win for both you and your customers. You might be wondering how much inventory should I take in, and how long should rental terms be, and the like.

The only want to determine these scenarios is putting the effort into creating a business plan that will unpack and optimize your equipment rental business opportunity. Get started today by perusing our selection of equipment rental business plans.

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How To Write a Business Plan for IT Equipment Leasing in 9 Steps: Checklist

By henry sheykin, resources on it equipment leasing.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan

Are you looking to start a business in the IT equipment leasing industry? You're in luck! The IT equipment leasing market is experiencing significant growth, making it a perfect time to enter the industry. According to recent statistics, the global IT equipment leasing market is projected to reach $1.1 trillion by 2027 with a CAGR of 13.5% . This booming market presents numerous opportunities for entrepreneurs looking to provide affordable IT solutions to businesses of all sizes.

Among the various business models in IT equipment leasing, the Direct Financing model has gained popularity, especially among small and medium-sized businesses. This model allows businesses to acquire expensive IT equipment without incurring high upfront costs. The leasing company directly finances the purchase of the equipment and leases it out to clients, who pay a periodic fee over the lease term. At the end of the term, clients have the option to purchase the leased equipment at a residual value.

So, how can you write a comprehensive business plan for your IT equipment leasing venture? Follow these 9 essential steps to ensure you cover all aspects and set yourself up for success:

• Conduct market research
• Identify target customers
• Analyze competitors
• Assess start-up costs
• Determine funding options
• Create a business model
• Develop a marketing strategy
• Define operational processes
• Establish legal and regulatory requirements

By following this checklist, you'll gain valuable insights into the market, identify your target audience, and formulate a solid business strategy. Remember, a well-structured business plan will not only guide your operations, but also attract potential investors and lenders who can provide the necessary funding for your IT equipment leasing venture.

Conduct Market Research

Before diving into the world of IT equipment leasing, it is crucial to conduct thorough market research. This step will provide you with essential insights and data that will help you make informed decisions throughout the business planning process.

Here are some key points to consider when conducting market research:

• Identify the demand: Determine the current demand for IT equipment leasing in your target geographical area. Look for any trends or patterns that could impact the success of your business.
• Analyze the market size: Evaluate the size of the market and the growth potential. Understanding the market size will help you gauge the level of competition and identify opportunities for growth.
• Understand customer needs: Gain a deep understanding of the needs and preferences of potential customers. Identify the types of IT equipment that are in high demand and the specific features or services that customers value the most.
• Research customer demographics: Determine the demographics of your target customers, such as their age, profession, and industry. This information will help you tailor your marketing efforts and develop targeted strategies to reach your audience effectively.
• Study industry trends: Stay updated on industry trends, technological advancements, and future predictions. This will enable you to anticipate changes and adapt your business plan accordingly.

Tips for Conducting Effective Market Research:

• Use a combination of primary and secondary research methods to gather information. Primary research includes surveys, interviews, and focus groups, while secondary research involves collecting data from reputable sources like industry reports and market studies.
• Engage with potential customers, industry experts, and professionals in the IT equipment leasing field to gain valuable insights and feedback.
• Keep a close eye on your competitors. Analyze their strengths, weaknesses, and strategies to identify opportunities for differentiation and improvement.
• Document and organize your findings to refer back to throughout the business planning process.

By conducting comprehensive market research, you will be equipped with the necessary knowledge to make informed decisions and develop a successful IT equipment leasing business plan. This step will lay the foundation for the subsequent steps in your checklist.

Identify Target Customers

Identifying your target customers is a critical step in developing a successful business plan for IT equipment leasing. By understanding who your ideal clients are, you can tailor your products and services to meet their specific needs and preferences. Here are some key considerations to help you identify and define your target customers:

• Industry and Sector: Determine the industries or sectors that are most likely to require IT equipment leasing services. Consider factors such as their reliance on technology, growth potential, and overall demand for IT resources.
• Company Size: Assess whether your target customers are primarily small, medium, or large businesses. Their size will influence their IT equipment needs, budget constraints, and decision-making processes.
• Geographic Location: Determine the geographical areas where your customers are located. This will help you focus your marketing efforts and ensure efficient service delivery.
• IT Requirements: Understand the specific IT equipment needs of your target customers. This may include factors such as hardware specifications, software requirements, and any specialized industry-specific technology.
• Budget and Financial Considerations: Analyze the budgetary constraints of your target customers. Determine whether they are more concerned with minimizing upfront costs or reducing long-term expenses.
• Customer Behavior and Preferences: Identify the buying behavior and preferences of your target customers. This may include factors such as their decision-making process, preferred communication channels, and willingness to lease IT equipment rather than purchase.

Tips for Identifying Target Customers:

• Conduct surveys or interviews with existing clients to gain insights into their needs and preferences.
• Utilize market research tools to analyze demographic and psychographic data related to your target customers.
• Stay updated on industry trends and emerging technologies to anticipate the evolving IT equipment needs of your target customers.
• Consider collaborating with industry associations or trade organizations to gain access to potential customers and build relationships.

Analyze Competitors

When starting a business in the IT equipment leasing industry, it is crucial to analyze your competitors to gain insights into their strategies, strengths, and weaknesses. This analysis will help you identify opportunities and position your business effectively within the market. Here are some key steps to follow when analyzing your competitors:

• Identify your main competitors: Begin by researching and identifying the companies that are already operating in the IT equipment leasing market. Consider both local and national competitors to get a comprehensive understanding of the landscape.
• Assess their offerings: Analyze the range of IT equipment that your competitors are leasing out to clients. Consider factors such as the quality, variety, and pricing of their equipment. This will help you identify any gaps in the market that you can exploit with your own offerings.
• Evaluate their pricing strategies: Study your competitors' pricing structures to determine how they charge clients for leasing their IT equipment. Look for any unique pricing models or discounts they may offer. This information will enable you to develop competitive pricing strategies for your own business.
• Examine their target customer base: Understand who your competitors are targeting as their primary customers. This will help you identify any niche markets or customer segments that they may be overlooking. You can tailor your marketing efforts to attract these untapped customers.
• Analyze their marketing and branding strategies: Study your competitors' marketing campaigns and overall branding to gain insights into how they position themselves in the market. Look for any unique selling propositions, digital marketing initiatives, or partnerships they have established. This will allow you to differentiate your business and develop effective marketing strategies.
• Keep track of your competitors' online presence, including their website, social media accounts, and customer reviews. This will provide you with valuable information about their customer satisfaction levels and potential areas of improvement.
• Network and attend industry events to gather information about your competitors from industry experts and suppliers. This can help you stay updated on the latest market trends and strategies.
• Regularly revisit and update your competitor analysis to ensure that you stay informed about any changes or new entrants in the market.

Assess Start-Up Costs

One of the crucial steps in writing a business plan for IT equipment leasing is to assess the start-up costs involved. It is essential to have a clear understanding of the financial requirements to establish and operate your leasing business. Assessing the start-up costs will help you determine how much capital you need to secure and how to allocate it effectively.

When assessing the start-up costs, consider the following:

• The cost of acquiring IT equipment from the manufacturer or vendor.
• The expenses associated with setting up a physical location or office space, if necessary.
• The costs of obtaining necessary licenses, permits, and certifications.
• The expenses related to marketing and promoting your leasing services.
• The costs of hiring and training employees, if applicable.
• Insurance costs to protect your leased equipment and business.
• The cost of developing and implementing a leasing software or management system.
• Research the current market rates for IT equipment to get an accurate estimate of your acquisition costs.
• Consider leasing the office space or utilizing co-working spaces to save on initial setup expenses.
• Explore potential funding options such as loans, grants, or partnerships to secure the necessary capital.
• Seek advice from professionals or consultants experienced in the IT equipment leasing industry to ensure your cost assessment is comprehensive and accurate.

By thoroughly assessing the start-up costs, you will be able to create a realistic financial plan and allocate your resources strategically. This step is vital for ensuring the financial sustainability of your IT equipment leasing business in the long run.

Determine Funding Options

When starting an IT equipment leasing business, it is crucial to determine the funding options available to ensure the financial stability and success of your venture. Here are some key steps to follow:

1. Assess your own funds: Determine how much capital you are willing to invest in your business. This could include personal savings, investments, or loans.

2. Research loans and grants: Explore various financing options such as business loans or grants specifically designed for small businesses in the IT equipment leasing industry. Consult with financial institutions and government agencies to understand the eligibility criteria and application process.

3. Seek potential investors: Consider approaching angel investors, venture capitalists, or other individuals who may be interested in funding your business. Prepare a compelling pitch to highlight the potential returns and market opportunities.

4. Explore partnerships and collaborations: Look for strategic partnerships with equipment manufacturers, vendors, or other established businesses in the IT industry. This can not only provide funding support but also open doors to potential clients or customers.

5. Consider leasing options: Explore lease financing options for your own business. Leasing equipment instead of purchasing it upfront can help conserve your capital and allow you to finance your operations more effectively.

• Prepare a comprehensive business plan and financial projections to present to potential lenders, investors, and partners.
• Research any available grants or subsidies for businesses in the IT equipment leasing industry.
• Focus on building a strong credit history and maintaining a good credit score, as this can improve your chances of securing favorable funding options.
• Consider seeking advice from financial advisors or consultants specializing in small business financing.

By carefully evaluating your funding options and developing a solid financial plan, you can ensure that your IT equipment leasing business has the necessary resources to thrive in a competitive market.

Create A Business Model

Creating a solid business model is crucial for the success of your IT equipment leasing venture. It serves as a blueprint for how your business will operate, generate revenue, and deliver value to your target customers. To create an effective business model, consider the following:

• Identify your leasing options: Determine whether you will offer direct financing, operating leases, or other types of leasing arrangements. Understand the benefits and drawbacks of each option and choose the one that aligns with your business goals.
• Define lease terms and pricing: Decide on the length of lease terms you will offer, as well as the pricing structure. Consider factors such as the equipment's depreciation rate, market demand, and competition while setting the lease rates. Ensure that your pricing is competitive yet profitable.
• Develop customer acquisition strategies: Outline how you will attract and acquire customers. Consider utilizing digital marketing techniques, networking with industry professionals, and establishing partnerships with IT vendors or manufacturers to generate leads and convert them into leasing clients.
• Create a risk management plan: Identify and assess potential risks that may impact your business, such as equipment damage, non-payment by clients, or changes in market conditions. Develop strategies to mitigate these risks, such as comprehensive insurance coverage, conducting regular equipment inspections, or implementing rigorous credit checks on prospective clients.
• Innovate your service offerings: Differentiate your business by adding value-added services or unique offerings to attract and retain customers. Consider providing equipment maintenance and repair services, offering flexible lease terms, or staying updated on the latest technological advancements to cater to the evolving needs of your target customers.

Tips for Creating a Strong Business Model:

• Conduct thorough market research to understand the demand, competition, and industry trends.
• Regularly review and refine your business model to adapt to changing market conditions.
• Seek advice from industry experts or consultants who have experience in the IT equipment leasing sector.
• Consider offering bundled services or attractive lease packages to attract a wider customer base.

By meticulously crafting your business model, you will be well-positioned to provide quality IT equipment leasing services, meet the needs of your target customers, and thrive in a competitive market.

Develop A Marketing Strategy

Developing a strong marketing strategy is crucial for the success of your IT equipment leasing business. Your marketing efforts will help you attract and retain customers, differentiate your offerings from competitors, and ultimately drive revenue. Here are some key steps to develop an effective marketing strategy:

• Clearly define your target market: Identify the specific industries, businesses, or individuals that are most likely to benefit from your IT equipment leasing services. This will help you tailor your marketing messages and reach the right audience.
• Understand your customers' needs and pain points: Conduct market research and engage with potential clients to gain insights into their IT equipment requirements, challenges, and preferences. This will enable you to position your leasing services as solutions that address their specific needs.
• Create a compelling value proposition: Clearly articulate the unique benefits and advantages of leasing IT equipment through your company. Emphasize how your offerings can save customers money, increase efficiency, or provide access to cutting-edge technologies.
• Establish your brand: Develop a strong brand identity that reflects your company's values, personality, and reputation. This includes designing a professional logo, creating a cohesive visual style, and crafting a consistent brand voice across all marketing channels.
• Choose the right marketing channels: Determine which channels will be most effective in reaching your target audience. This may include digital marketing tactics such as search engine optimization (SEO), social media advertising, content marketing, and email campaigns. Additionally, consider traditional marketing methods such as industry events, print advertisements, and direct mail.
• Build a user-friendly website: Create a well-designed website that showcases your IT equipment leasing services, provides helpful information to potential customers, and allows for easy contact and inquiries. Optimize your website for search engines to improve organic visibility.
• Develop engaging content: Produce high-quality content, such as blog posts, whitepapers, case studies, and videos, that educates and informs your target audience about the benefits of leasing IT equipment. This positions your company as a trusted industry resource and helps to establish credibility.
• Utilize customer testimonials and referrals: Encourage satisfied customers to provide testimonials or refer your services to others. Positive reviews and referrals can significantly boost your credibility and attract new customers.
• Monitor and analyze your marketing efforts: Regularly track and measure the performance of your marketing campaigns to identify what tactics are working well and what areas need improvement. Use data and analytics to adjust your strategies and optimize your marketing budget.
• Consider partnering with IT vendors or manufacturers to gain access to their customer base.
• Offer special promotions or discounts to incentivize new customers to choose your leasing services.
• Engage in targeted advertising to reach specific industries or businesses that are more likely to require IT equipment leasing.

Define Operational Processes

Defining operational processes is crucial for the smooth functioning of your IT equipment leasing business. These processes ensure that your operations are efficient, well-organized, and streamlined. Here are some important steps to consider when defining your operational processes:

• Inventory Management: Develop a system to track and manage your IT equipment inventory. This includes keeping records of leased equipment, monitoring maintenance schedules, and tracking equipment returns at the end of lease terms.
• Lease Agreement Process: Establish a standardized process for handling lease agreements with clients. This should include drafting and reviewing lease agreements, verifying client information, and documenting terms and conditions.
• Installation and Setup: Determine the procedures for installing and setting up leased equipment at client locations. This may involve coordinating with technicians, ensuring compatibility with existing systems, and providing training to clients' staff.
• Maintenance and Support: Define the processes for providing maintenance and support services throughout the lease term. This could include regular equipment inspections, troubleshooting technical issues, and offering timely repairs or replacements.
• Payment and Invoicing: Establish a clear and efficient system for handling rental payments and issuing invoices to clients. This may involve setting up online payment methods, generating recurring invoices, and tracking payment receipts.
• Customer Relationship Management: Implement a customer relationship management (CRM) system to effectively manage client interactions and track customer needs and preferences. This can help improve customer satisfaction and enable you to offer personalized services.
• Regularly review and update your operational processes to adapt to changing market trends and customer demands.
• Document your processes in detail to ensure consistency and provide guidelines for new employees.
• Invest in automation tools or software solutions to streamline and automate repetitive tasks, such as lease agreement generation or payment processing.
• Establish clear communication channels with your clients to promptly address their needs and concerns.
• Consider outsourcing certain operational tasks, such as equipment maintenance or customer support, to specialized service providers to enhance efficiency and focus on core business activities.

Establish Legal and Regulatory Requirements

When starting an IT equipment leasing business, it is crucial to establish a solid understanding of the legal and regulatory requirements that govern the industry. Complying with these requirements not only ensures that your business operates within the boundaries of the law, but also helps build trust with your customers and business partners.

Here are some key legal and regulatory considerations:

• Licensing: Research and obtain any necessary licenses or permits required to operate an equipment leasing business in your jurisdiction. This may include state or local licenses, as well as any specific industry licenses.
• Contractual Agreements: Work with legal professionals to draft comprehensive lease agreements that outline the terms and conditions of the lease, including payment schedules, liability provisions, and dispute resolution mechanisms. These agreements protect both your business and your clients.
• Consumer Protection Laws: Familiarize yourself with consumer protection laws that apply to leasing transactions. Ensure transparency and fairness in your leasing practices, and clearly communicate any fees, penalties, or restrictions in a consumer-friendly manner.
• Data Privacy and Security: Safeguarding customer data is paramount in the IT industry. Develop data privacy and security policies that comply with relevant regulations, such as the General Data Protection Regulation (GDPR), and implement robust measures to protect sensitive information.
• Tax Obligations: Understand your tax obligations as an equipment leasing business. Consult with a tax professional to ensure compliance with tax laws, including income taxes, sales taxes, and any applicable deductions or credits.
• Insurance: Evaluate the need for insurance coverage for your leased equipment, liability, and potential risks. Consult with an insurance specialist to determine the most appropriate insurance policies for your business.
• Stay updated with changes in laws and regulations related to leasing and the IT industry. Subscribe to industry publications or join relevant professional associations to stay informed.
• Consult an attorney experienced in equipment leasing to ensure your business is fully compliant and protected.
• Keep meticulous records of all legal and regulatory compliance activities. This can help you demonstrate your commitment to operating ethically and establish trust with potential clients.

By establishing a strong legal and regulatory framework for your IT equipment leasing business, you can minimize risks, build credibility, and position your business for long-term success.

Writing a business plan for IT equipment leasing using the Direct Financing model requires careful consideration of various factors. By following the nine steps outlined in this checklist, you can ensure that your business plan is comprehensive and effective.

Conducting market research will help you understand the demand for IT equipment leasing in your target market, allowing you to identify your potential customers. Analyzing competitors will enable you to differentiate your leasing company and develop a competitive advantage.

Assessing start-up costs and determining funding options are crucial steps in creating a realistic financial plan for your business. Additionally, developing a solid business model and marketing strategy will help attract customers and generate revenue.

Defining operational processes and establishing legal and regulatory requirements will ensure that your business operates smoothly and complies with all necessary regulations. By following this checklist, you can create a comprehensive business plan for IT equipment leasing that maximizes profitability and meets the needs of your target market.

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Equipment Leasing Company Business Plan and SWOT Analysis

Equipment Leasing Company Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Equipment Leasing Company Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Equipment Leasing Company business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be available for download after your purchase.

Product Specifications (please see images below):

• Bank/Investor Ready!
• Complete Industry Research
• 3 Year Excel Financial Model
• Business Plan (26 to 30 pages)
• Loan Amortization and ROI Tools
• Three SWOT Analysis Templates
• Easy to Use Instructions
• All Documents Delivered in Word, Excel, and PDF Format
• Meets SBA Requirements

Equipment leasing brokers are an essential part of the business develop industry. Many businesses require pieces of equipment that are substantial and cannot be readily purchased with cash on hand. As such, many equipment leasing brokers specialize in providing affordable solutions for companies that need very high-end equipment and only want to pay a monthly fee for these furniture, fixtures, and equipment. These companies generate significantly high gross margins from their services. Additionally, the startup costs are associated with the new equipment leasing business are relatively low. An individual that has contacts within the industry can start this business for as little as $5000 or as much as $100,000 depending on the initial scope and scale of the business.

Most banks and lenders will provide some level of support to a quick equipment leasing program businesses. Usually, these businesses will receive a working capital one credit that will allow them to finance their underlying expenses while they reach profitability. As with any business is looking to raise capital, a business plan is required. This business plan should have a three-year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. One of the drawbacks to receiving capital for is that the business is that they do not often have a large tangible asset base and as such it is difficult to find lenders that are willing to readily provide financing for these companies. However, there are a spent number of specialized lenders that are willing to provide working capital lines of credit and related credit products to companies that specialize in providing services to the business public.

The marketing plan that is required by the equipment leasing company is somewhat limited. As these businesses specialize in providing their services to other businesses, a majority of marketing that occurs usually deals with calling on existing contacts within any specific industry. For instance, there are many companies that specialize in medical equipment leasing and the individuals that always companies have extensive relationships with hospitalists and physicians. As such, if equipment leasing company is operating within a specific niche and it is important that that individual has extensive relationships with buyers at companies that require ongoing equipment purchases and leasing.

And equipment leasing company SWOT analysis is often frequently carried out in order to determine the strengths, weaknesses, opportunities, and threats that are common to these companies. As it relates to strengths, these businesses are able to generate significant profits each time they successfully closing leasing deal. Additionally, these companies can work in recurring streams revenue from the ongoing renewal of leases as well as a percentage of monthly payments made. For weaknesses, there is a significant amount of competition in this industry and there will continue the so in perpetuity. For opportunities, many equipment leasing companies focus significantly on developing ongoing and recurring relationships with major manufacturing firms, construction companies, and other businesses that have large capital needs. For threats, changes in the interest rate can impact the way that companies acquire their equipment. As such, drastic spikes in the interest rate or declines in the prevailing interest rate can impact the profitability of these companies.

Given the low operating and overhead costs and high gross margin revenue generated by equipment leasing companies, these businesses are usually profitable in most economic climates and can produce a very strong return on investment for their owners. However, it is imperative that anyone enters us in the street have a significant amount of experience in equipment financing in order to have a competitive advantage over other agents in the market.

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

How to use the equipment loan calculator

1. enter your information.

Purchase price: The purchase price reflects the total amount the vendor is charging to purchase the desired equipment.

Down payment: Many lenders require a down payment from the small-business owner — anywhere from 10% to 30% of the purchase price depending on the lender.

Loan term: You may input your desired number of months, or base this number on the available terms from lenders you’re interested in. The longer the loan term, the lower your monthly payments; however, the total cost of financing may be higher with a longer term than a shorter term.

APR: Annual percentage rate ( APR ) represents the annualized cost of interest, plus any fees associated with the loan. If your lender doesn’t provide an APR, you can calculate it by adding the total amount of fees to the original loan amount and calculating the interest on that amount. For example, if your loan amount is $100,000, with an interest rate of 5% and $4,000 in fees, you would first add the fees to the original loan amount to get a new loan amount of $104,000 ($100,000 + $4,000). Then, calculate the interest on this new loan amount to get the annualized payment of $5,200 ($104,000 x .05). Divide the payment by the original loan amount to get the APR of 5.2% ($5,200/$100,000).

2. Calculate your results

Once you click “calculate,” the calculator will automatically generate results based on your input. You can experiment with different numbers to get an idea of what different loan scenarios will look like.

Understanding your results

What is an equipment loan?

An equipment loan is a specific type of small-business loan used for the purchase of equipment and machinery that is needed for business operations. They are typically sought by businesses that use large, expensive equipment, such as construction companies, restaurants, manufacturers or auto body shops. Equipment loans are typically secured by the equipment being financed, making them relatively low risk for lenders and a good long-term investment for a business.

» MORE: How much collateral do you need for a business loan?

Where to get equipment loans

Equipment loans are available with almost every type of lender. The best fit for your business will depend on your qualifications and the time you have available.

Banks and credit unions. Banks and credit unions generally offer the most affordable options to finance equipment. For example, U.S. Bank offers equipment loans up to $1 million with no money down, and up to 125% financing to cover the full price of the equipment plus extra costs. However, bank loans can be some of the most difficult to qualify for, often requiring strong personal credit, at least two years in business and high annual revenue. 

Online lenders. If you’re in need of a faster financing option, online lenders may be able to fund an equipment purchase in as little as 24 hours. Online lenders often have less stringent requirements to qualify for equipment loans; however, you’ll likely pay more in interest and fees. 

SBA lenders. Both SBA 7(a) and SBA 504 loans can be used to finance large equipment purchases, and may be offered by banks, credit unions, certified development companies (CDCs) or community development financial institutions (CDFIs). SBA loans offer long terms — typically 10 years or more depending on the useful life of the  equipment — and low interest rates, but you’ll need good credit to qualify. 

Specialized equipment lenders. Some lenders, like JR Capital, specialize in equipment financing, especially for specific types of businesses like commercial construction or manufacturing. While these lenders likely won’t provide rates comparable to banks, it can be beneficial to work with specialized lenders that are familiar with your industry and the type of equipment you are financing.

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