Equipment financing gives you the ability to acquire the items that are vital to your business operations. When you need to purchase expensive equipment or supply a new business with all the necessary tools, this type of funding can help you maintain cash flow and growth.
The term equipment refers to the physical assets you need to run your business. These items may include computers, software, phone systems, office furniture, farming equipment, heavy machinery and refrigerators.
There are two ways to secure this kind of funding: equipment loans or equipment leases. If you are purchasing items with a long life span, a loan is likely the ideal option. However, if your systems or technology needs regular replacement or updating, a lease may be the better choice.
This type of finance opportunity is specific to obtaining operational items and funds much quicker than traditional lending options. The application process is more straightforward than other borrowing choices, and the equipment itself serves as the collateral for the funds, leaving your assets secure.
Loans for this purpose are more challenging to qualify for than leases. You must have good personal and business credit scores. You must also demonstrate the ability to repay the money and likely need to put a down payment upfront.
With this lending type, you own the equipment at the end of the agreement terms and the items you purchase provide the collateral for the funding. This borrowing choice is an excellent option for established businesses that are buying long-lasting items.
This equipment financing option allows you to use needed equipment for a monthly fee. The leasing company owns the items, and you pay to use them. You do not own the equipment but may renew your agreement, upgrade your equipment or purchase at the end of the contract terms.
This option is the right choice for new companies that lack sufficient business history or credit scores. It is also an ideal choice for industries that use tools and materials that require constant upgrading. If your equipment’s life span is short, a lease is the best option for your business.
The application for this specific financing type is quicker and more straightforward than a traditional loan. Some of the paperwork you may need includes:
- Credit scores
- Bank statements
- Business tax returns
- Driver’s license
- Cost of the required equipment
Leave your working capital and credit lines intact by accessing equipment financing to obtain the necessary materials and tools for your business’s successful operation.