Everything You Need To Know About Equipment Financing for Your Business
The right equipment can make all the difference when you’re trying to streamline your business’s operating process. However, if you’re like most business owners, finding the money to pay for the equipment you need upfront is almost always a challenge. Equipment financing can help you gain access to the tools you need without forcing you to wreck your budget by spending the funds you need each month. Here’s what you need to know about this method of equipment purchasing.
It’s Easy To Apply for Financing
When you apply for standard business loans, you’re essentially responsible for convincing the bank that your business is worth lending to. This means compiling a detailed business plan and making sure your credit and finances are in order long before you even apply. Once you do, it can take several months for the lender to reach a decision.
Equipment loans are much easier to qualify for and lenders are far less concerned about your business’s profits or credit score. This is because borrowers are considered low risk as the bank can always take possession of the equipment if you default on the loan.
Down Payments Aren’t Usually Necessary
Many loans require down payments to show the bank that you’re serious about the loan. This isn’t the case with equipment loans. In fact, you’re often able to finance the full cost of the equipment from the very beginning. This means you won’t have to restructure your company’s budget just to buy the equipment you need.
Keep in mind that some lenders still require down payments. Take your time and get quotes from several companies and always ask about down payment requirements before you accept the money. If they require a down payment, keep looking for a different lender.
Equipment Loans Are Very Specific
When you apply for an equipment loan, you’ll need to specify which type of equipment you’re buying, how much it will cost, and what the equipment is worth. If a lender approves the loan, you’ll only be able to use the money to buy the piece of equipment you mentioned in the application. If you need to buy additional equipment, you’ll need to take out another loan altogether.
This lack of flexibility can be tough for businesses that aren’t absolutely certain of their needs. Before you apply, make sure you know which equipment you’re looking to finance and are completely sure that it will do what you need it to.
If you’re looking into equipment financing, keep these things in mind before you apply for a loan.