Equipment financing is a way for businesses to obtain the gear they need to operate. By reading this post, you’ll learn why so many businesses have used financing to obtain equipment.
Cash Flow Help
Sinking a massive amount of money into a piece of equipment can cripple a company’s cash flow. However, financing allows companies to spread the cost of the equipment out over many months or years, preserving cash flow for other needs. For instance, as pointed out by the Equipment Leasing and Finance Association (ELFA), the money saved up front with financing can instead go toward expanding your business or marketing your goods.
Just like equipment financing can preserve your business’s cash flow, it can also keep your business’s other sources of credit free. Again, this means your business’s spending power will remain available to handle other needs and chase opportunities as they arise.
Support from the Equipment Financier
Equipment financiers can be a valuable source of support. For example, some provide “lifecycle asset management solutions,” per the ELFA. They may also be able to help with installation, equipment maintenance, disposal at the end of the equipment’s useful life, and other tasks.
A High Percentage of Financing
In many cases, equipment financing can cover 100 percent of the equipment’s cost without requiring a down payment. And even if a down payment is required, financing usually covers the vast majority of a piece of equipment’s overall cost.
Lower Rates and No Fees
Traditional loans often come laden with hidden fees that drive the true cost of the transaction up for the borrower. However, equipment financing tends to lack such fees, meaning lower costs and greater transparency. Another cost-saving consideration is this: Equipment financing often has relatively low interest rates.
If you’d like to keep learning about financing and other business-related topics, take a look at Whitefish Funding’s additional blog posts.