How Small Businesses Can Succeed with Equipment Financing
Does your business need equipment? Nearly every business could use the latest technology or streamlined industrial machine, but some businesses wouldn’t be able to operate without essential pieces of equipment. If you’re unable to find the funding to start your small business because of these costs, discover how competitive equipment financing can help you get your small business started.
This general category of financing includes a variety of loan types that can be used to purchase almost any piece of equipment. From the must-haves of a new small business to the more luxurious time-saving devices that a mid-sized business can afford, use your equipment financing for whatever machine you need for your business plan.
Vehicles, farm equipment, construction tools and IT technologies all fall under this broad category. Even if your small business may not have any essential items, you can probably think of a few items that could dramatically reduce your workload or expand your business offerings.
While the specifics of equipment financing can vary, most financing options have some basic features that are similar. For instance, you will typically only receive financing for between 80 and 90 percent of the overall cost of the piece of equipment. You’ll need to pay the remainder. Unlike equipment leasing, however, you’ll be the owner of the equipment and will be able to keep it as a business asset after the payment period has ended.
Of course, there are some disadvantages to using financing for your equipment. You’ll pay interest rates on the loan, which can be as high as 9 percent. Most financing terms range between two to seven years. Some lenders will charge a prepay penalty, while others will encourage you to pay your loan back promptly. If you use equipment that quickly loses its value, you may be paying towards a piece of equipment that has lost much of its value. However, if your equipment is designed to last much longer and is too costly to purchase outright, financing can be one of the best options for your company.
From small office appliances to major construction equipment, equipment financing can provide the funding you need to get the machines your business requires. Your lender will work with you to set up a payment plan that can work with your business and is mutually beneficial. If your business could benefit from additional equipment, but you’re struggling to secure the capital you need, consider using financing for your equipment purchases.