Equipment finance refers to a loan or lease employed to acquire specific business equipment, which is any non-tangible personal property other than raw land. Equipment financing can be either through securing a commercial loan to buy equipment or renting such equipment on a per-usage basis. The various types of equipment financing include working capital loans, capital advances, merchant cash advances, inventory financing, and sales credit lines. In some cases, companies need equipment for their operations but do not have enough credit available to do so. In this case, Click Here to apply for a credit line from the lender, which would be secured against the property that you have already pledged as collateral.
Equipment financing for small businesses includes a variety of different options available, including lease agreements and lease payments made directly to the lending company, as well as financing through lines of credit. Leasing is a good way for a business to acquire new technology, which lowers initial costs and increases profits. In general, there are two ways to go about a lease. Either the lessee makes payments according to usage and the property is kept under lease, or the lessee allows the equipment to be placed on the business credit account until it is paid off.
For small business owners, the best option may be to use a lease to finance the purchases. The drawback with this method is that most equipment financing terms are very short-term. This means that a business owner must make all payments during the term or risk the loss of equipment. Depending on the type of equipment financing, this could mean a loss on the initial investment. However, many equipment financing programs are designed to be renewed automatically through simple re-orders, so this option may not be necessary in the long run.
Another alternative is to obtain business equipment financing by taking out a personal loan. This may not be possible for many entrepreneurs, especially those who do not have a good credit history. Equipment loans are made based on the equipment value and the business owners’ credit history. Personal loans are not tied to any lease terms, so they provide a relatively risk-free alternative to equipment financing.
There are some things to consider before obtaining a personal loan to obtain equipment finance. Most personal loans are secured by a borrower’s home, car or other high-interest asset. Because these types of loans carry with them inherent risks, most lenders will require a co-signer. The co-signer must sign an agreement agreeing to repay the loan if the borrower defaults.
Business owners may obtain equipment finance through other sources such as equipment leasing. There are two types of equipment leases – capital lease and operating lease. Capital leases are similar to personal loans, except that the business owners are required to repay the funds used to purchase the equipment within a specific period of time. The major difference between capital and operating leases is that the capital lease does not require a co-signer. Operating leases are similar to a personal loan in that the business owner is required to make monthly payments towards the cost of purchasing equipment.
In addition to equipment financing agreements, there are many different means through which businesses can obtain equipment finance without the hassle of applying for bank loans. Business owners can obtain financing directly from a manufacturer, dealer or distributor. Manufacturers and dealers typically provide low-interest, long-term equipment leases. Equipment suppliers or distributors may offer slightly higher interest rates, but they often require only a one-time payment or may have better payment terms. For banks, equipment leasing financing is one of the most attractive options to obtain for small businesses.
To obtain equipment financing with little or no money down, business owners should check with a local banker or credit union. Banks generally do not provide loans for equipment unless the business has a very good credit. Equipment leasing loans may also be available from commercial lenders, but again, the loan amount may not be enough to completely fund the start-up costs of the new or leased equipment. When comparing different equipment financing options, it is important to look at both the equipment price and the terms of the loan. Business owners should be sure to read all fine print in any equipment financing agreement to be sure that all of their financial responsibilities will be met.