HOW EQUIPMENT FINANCING WORKS
Making large purchases of vital equipment is unavoidable for most businesses, new or old. New equipment can help your business to bring in more revenue – whether it be a van to help deliver catering or another oven to meet higher demand. Handing over the cash for these purchases can set you back a significant amount, and that’s what makes equipment financing an attractive option for expanding, starting or updating a business.
Average 8-30% Interest Rate
Up to 100% of Value
1-5 Year Max Loan Term
Most businesses in good standing can qualify for equipment financing loans. It can actually be a good option if your credit score is on the lower end because the equipment you’re financing acts as the collateral. The details of how much and for how long depends on the type of equipment and how much it costs.
Lenders are interested in securing a loan, so when you’re financing equipment, they’re often not as concerned with your borrowing history because the equipment acts as collateral.
What You're Going To Need
Business Tax Returns (for loans above $150k)
Voided Business Check
Bank Statements (for those lacking credit)
Equipment Price Quote
MOST CUSTOMERS WHO WERE APPROVED HAD:
$0k Annual Revenue
450 Credit Score
0+ Months in Business
What else should you know about Equipment Financing?
Like most loans, you’ll need to provide the financial health of your business along with your credit score. Most equipment lenders will also ask for information about the equipment you’re looking to buy and a quote of how much it will cost. When your business doesn’t have enough cash to purchase a new piece of equipment upfront, equipment loans are the best option. You use them the same way an individual would use a car loan, and then pay them back via monthly payments.
How much you can borrow depends on what you’re looking to finance, and the price will dictate the terms and interest of the loan. The equipment itself acts as collateral, so you won’t need to put up additional collateral to secure the loan. This self-secured loan is often easier for some businesses to qualify for.
How Long Does Equipment Financing Last?
Like most loans, you’ll need to provide the financial health of your business along with your credit score. Most equipment lenders will also ask for information about the equipment you’re looking to buy and a quote of how much it will cost.
Difference Between Equipment Financing and Equipment Leasing
Business lines of credit traditionally have lower interest rates and closing costs, but have pretty strict repercussions if you exceed your limit or miss a payment. Traditional loans are usually used for one time, specific, larger purchases, while lines of credit are best for repeated spending or cash flow. This doesn’t mean you can’t make large purchases with a line of credit, but often, traditional loans are better suited for these types of expenditures.
Different Types of Business Lines of Credit
Some equipment sellers offer the option to lend equipment directly to their customers and charge a monthly rental fee, much like renting an apartment. With this option, you can only use the equipment while you’re paying for it. If you chose to finance equipment with a loan, you’ll own the equipment when you’re done paying for it. If you know your business will need the equipment for a while, financing with a loan is usually a better investment.