Many business owners may find that their business need upgraded equipment to improve efficiency and to be able to better serve customers. However, new equipment requires money as every business owner knows, and access to cash may be an issue that could impede the flow of their business. How do you confront the problem of not having the cash to purchase the new equipment that you need to grow your business? Equipment financing is the answer. It can aid in financing up to 100% of the new or used equipment needed for your business, be it computers, machinery, or vehicles. Let’s take a quick look at equipment financing and how it could prove beneficial for you and your business.
The Fundamentals of Equipment Financing
When you don’t have the cash on hand to purchase a certain piece of equipment for your business, a small business equipment loan could be the solution that could allow you to finance your equipment. Equipment financing can be used to purchase a range of business equipment, and the amount of money that you can borrow depends on whether that equipment that you need is new or used. The terms of your equipment financing are also determined by the price of the equipment. In general, the equipment itself can serve as collateral to secure the loan, providing security for the lender. Failure to repay the loan would result in the lender seizing the equipment and liquidizing it to recoup their losses. Furthermore, it is typical for equipment loans to be made at fixed interest rates, with set term lengths, so your payment amount will not increase.
Qualifying for Equipment Financing
Since equipment financing is self-collateralized, it is slightly easier for many business owners to qualify for an equipment loan. The value of the equipment, your business’s financial history and your credit score will also be factors that will be taken into account. Chances are, even if your credit score is not so great, you could still secure a loan because the equipment acts as collateral.
Uses for Equipment Financing
Equipment Financing provides the cash for just about any piece of equipment your business needs, including:
- Restaurant Equipment: A restaurant kitchen needs a lot of upkeep and maintenance, for functionality, demands of constant use and the need to maintain mandated health and safety standards.
- Computer Hardware & Software: Updating technology is essential in today’s business environment, not only for sales and marketing purposes, but for security purposes as well.
- Construction Equipment: Construction work is made more efficient with the use of certain equipment, eliminating a lot of imperfect mechanisms in construction.
- Commercial Vehicles: If you run a small business that requires the use of a commercial vehicle, you know that without it, you are not making any money.
Equipment financing can be a great solution for you if you need equipment to keep your business afloat, but do not have the cash on hand to make a purchase. This type of financing is easier to acquire because the equipment itself is used as the collateral. You can finance just about any piece of equipment you need and not worry about the interest rate increasing. You need money to make money, and equipment financing may be just what you need to grow your business.