Whether you’re running a small building business, a restaurant, or operating out of your own home, chances are that your company needs equipment to do its basic functions properly. If you’re strapped for cash, perhaps your only choice might be to get equipment financing. Before you start looking around for lenders, ask yourself if your company qualifies for equipment financing so you know whether it will work or not. Here are some helpful suggestions on how to go about it:
– Determine how equipment financing works. The basic difference between leasing and equipment financing is that a leasing will force you to pay monthly payments while the former will allow you to pay the loan off in installments. There are a number of different ways to apply for this type of loan.
– Consider your employees and business needs. Just like any other loan, equipment financing might work for your small business if you meet the criteria. Lenders will consider the size of your company, the number of employees you have, and even the number of vehicles you use as collateral. Your business needs equipment to run properly so you’ll have to show them why your business is a success.
– Try to find a reputable equipment financing borrower. You can usually spot reputable equipment financed by looking at their credit history and overall reputation. It’s also smart to talk to your friends and business contacts. Those who’ve used equipment financers say they provided them with the best service and have managed to obtain the funding they needed.
– Equipment financing might also work for your small business if you’re a large manufacturing company that needs to purchase large quantities of items that are too expensive to buy on a lease. Rather than paying for the equipment upfront, you could pay a monthly fee to acquire the loans instead. This is known as a long-term capital lease.
Small business loans can be obtained from a number of traditional lenders, as well as some of the more popular alternative lenders. If you are looking to get funding, you will find that most banks will not be willing to provide a large amount of capital for a startup business due to the higher risk that they present. Also, a majority of banks offer a very limited amount of capital and as previously mentioned they have a higher adoption rate for borrowers that qualify for traditional loans. As such, it may be easier for an individual to secure traditional loans from banks when they have a strong business plan and strong credit scores.
These are just some of the reasons equipment financing might be available to you. If you need immediate working capital but you don’t have collateral to offer, this might be an option for you. As long as you make sure to take the time to research different options, you should be able to find equipment financing that works for your business. You’ll be able to increase your cash flow while you meet the deadline for repayment, so this could be the perfect solution.