Heavy equipment financing can be a tough nut to crack if your business is on the smaller side. Traditional equipment financing programs and SBA loans both require a significant down payment. They also have lengthy repayment schedules. What many small business owners do not realize is that you can use your business assets to access the capital you need to get that heavy equipment upgrade installed in your shop.

How Asset-Based Loans Work

You might be familiar with financing your business assets if you already have experience using a product like accounts receivable financing or inventory loans. What makes a broader asset-based loan different is the lender’s use of all your available business assets together. Financing based on the collected value of your equipment equity, inventory, and invoices at once provides the largest influx of working capital possible so you can turn around and use it to purchase heavy equipment that will keep your business working for years.

The loans themselves tend to be term loans but they are contingent on the value of those assets. What that means is that you may have to direct invoice payments to the lender or pay off the relative value of financed inventory right away if it is sold. Lenders all have slightly different program requirements, so make sure you check them out while shopping prices. The right asset-based loan can be the path to equipment financing without long-term debt because these loans are designed for short-term capital based on your immediate assets and income prospects.

Finance for Working Capital as Needed

Once you pay down an asset-based loan, you can finance your business assets over again to make use of fresh invoices and new inventory acquisitions. Used judiciously, this can provide a path to business growth by financing everything you need to keep growing, from the staff members that handle larger orders to the equipment they work on. Since the capital is yours to use with no strings attached, it’s an easy way to put money wherever your business needs it.

The best way to get information about how much your assets are worth is to get a quote on financing. Contact a lender to learn more, and make sure you check out which assets they finance. Each program that offers asset loans for equipment financing has a slightly different approach and a different fee structure. Make sure you find the right fit for your business’s structure and sales cycle to get the lowest capital costs available.