Looking to purchase equipment or technology for your business? Securing new or used equipment financing doesn't have to be a hassle. And what you can finance is only limited to your imagination. We can help you acquire it with our affordable financing solutions.
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Are you a small business owner wondering how to get expensive new equipment with low or no down payment or without paying high rates? You don’t need a heap of cash reserves or to provide endless financial statements. You can do it with the help of Business Equipment Financing & Equipment Leasing. Small business owners now have many loan options when financing equipment, not just your local bank.
With business equipment loans, you can enjoy small monthly payments almost as if you were equipment leasing. Better yet, once the balance is paid off, you own the new equipment outright.
Many small business owners have something in common, and that’s equipment cost. Whether we’re talking about upgrading it or breakdowns, purchasing equipment costs money and put a strain on your cash flow.
The approval rate to get business equipment financing with online lenders and even local banks like Wells Fargo or Bank of America is among the highest of all funding products. Typically, it hovers around 80%. The application process and payment options are straightforward. The paperwork needed is minimal. Best of all, small business owners can get funded in a matter of days, with low or no down payment, and enjoy better rates (starting at 5%), which in most cases qualifies for a tax deduction.
The business equipment financing option is very similar to term business loans, the only difference being it’s specifically for purchasing equipment. Because equipment financing is so advantageous, small business owners can purchase what they need with low or no down payment, easy repayment terms, and save money with competitive rates.
Equipment loan alternative lenders and most equipment financing lenders, in general, will allow the borrower to use the asset as collateral, so they’re protected; thus, the rate is lower and could increase the loan amount. All of these points can help cash flow when you need to finance equipment.
How much can you borrow with business equipment loans?
Typically, the small business can get up to 100% of the loan amount needed to purchase equipment and equipment leasing. In some cases, a down payment and minimum credit score may be required for equipment financing. Since the asset is used as collateral, you’ll save money with equipment financing because the interest rate would be lower than other equipment finance options like unsecured business credit lines, invoice factoring, merchant cash advances, or different types of small business loans.
Many small business owners ask, “how does business equipment financing work?” Equipment financing works similar to term business loans with regard to payment options. You pay fixed periodic payments (including principal and interest) every month until the balance is paid in full. In the end, the equipment is yours.
With the business equipment loan options available, you can borrow up to $5 million per piece, perfect for heavy equipment financing. The interest rate for equipment finance starts as low as 5%. To qualify for equipment financing, you don’t need super strong credit. All you need is to have a 600+ minimum credit score.
Businesses can get equipment financing to purchase:
As mentioned above, with business equipment loans, the asset is the collateral; that’s why the interest rate starts this low, and you don’t have to wait weeks because quick approval is prevalent.
For the equipment loan finance company to find out the value, they may ask for information, including the purchase price, age, seller, and manufacturer info, among other items. The equipment financing lender needs this info to make sure they can recoup their investment in case of a default.
Let’s say you’re a baker. To increase your cupcake productivity by 3x, you need an industrial oven, which costs $75,000.
You can negotiate a five-year term with as low as 5% interest by applying for an equipment loan. But, again, because you’re using the oven as collateral, you’ll save money by getting a lower rate and potentially higher loan amount than you would with other funding products. Also, you most likely won’t need a personal guarantee with equipment finance.
For a small business to get larger loan offers with low interest and a longer-term, they generally need collateral. This is understandable as equipment loan finance companies want to be sure that their risk is minimal in the case of a default. By simply using the equipment as collateral, the lender will grant favorable terms for their equipment loans. This is possible even if their credit scores don’t rival a blue-chip company or the annual revenue isn’t in the seven-figure range. As a matter of fact, an alternative lender (or bank) might even overlook the age of a new business with collateral in the picture. With equipment loans, the purchased asset acts as collateral. For this reason, even small businesses with a subpar credit rating, an imperfect balance sheet, imperfect cash flow, or less than two years of activity can apply for equipment financing.
On the other hand, if the same company would apply for a standard term loan, the situation would be different. They would have to pay higher rates with a short-term business loan only because they don’t have collateral to reduce the risk.
Financing equipment also allows you to own the asset, as opposed to leasing. Though equipment leasing has its advantages, there’s a good chance that it will cost more money than purchasing in the long run.
Also, keep in mind that the primary purpose of equipment financing is to avoid paying the entire cost upfront. So instead, you make monthly payments, which helps cash flow.
Did you know that interest payments are usually tax-deductible? It’s a major selling point for many businesses. Although lease payments may qualify for a tax deduction, why not own it instead?
Industry leading approval process that is easy and less intensive. Get the capital you need to allow your business to grow, today!
