Making the Expensive Affordable
From auto shops to restaurants, all business owners know that having access to quality equipment is essential to their operations. But what if you can’t afford to pay the cost upfront? Luckily, equipment financing can help you acquire expensive tools and machinery without putting your business in the red. Whether you’re a small, new business or an established business looking to expand, financing could be the solution to keeping your operations running smoothly.
Do You Qualify?
Before you start applying for financing, consider the minimum qualifications. Lenders will be looking for a credit score of at least 600. The higher your credit score is, the easier it will be for you to negotiate terms better suited for your business, including lower interest rates. You should also have both personal and business-related finances prepared for your lender so that they can properly evaluate your credibility. Additionally, a business plan is usually required, which includes your profits, future goals, and how you believe a loan would boost your business.
Loans versus Leases
Both loans and leases grant you the opportunity to own your equipment once the term is up, but depending on your long-term goals, one option might be more appropriate than the other. Acquiring a loan to borrow money to purchase your equipment will generally cost more upfront but less in the long run. Often, down payments of up to 20% are required, but your fixed interest rate will be lower. Leases are popular for those who need a more manageable monthly payment and want some of the soft costs covered. The caveat to this is that your interest rate is higher, generally costing you more down the line. When choosing between a loan and a lease, consider how you plan on using your equipment, too. If you intend to use it beyond three years, a loan might be the most financially sound choice.
Skip the Bank
If you’ve got your eye on industrial equipment, you may choose to avoid the hassle of acquiring a bank loan altogether. Because heavy equipment and machinery can be quite costly, many businesses opt to lease the equipment from industrial leasing companies. These companies don’t have the same stringent terms that a bank may have. Often, you’ll be offered a far more flexible deal that gets you your equipment much faster and more affordably. If you need heavy-duty hardware for your business, industrial equipment financing may be your saving grace.
