No company can operate without the proper equipment. Whether this consists of heavy machinery or the latest in computer tech, financing it can be the difference between a promising company and a proverbial money pit. Fortunately, there are a number of excellent financing options to choose from that can fit any business type.
Why You Need Financing
Not every business starts out with the cash flow to make major equipment purchases. Equipment financing is essential to the life and growth of every business, and it’s important to understand whether to seek out a bank, direct financing, or a loan option that provides more flexibility.
Loans for Equipment
This can be compared to a rent-to-own agreement with more specific terms. This is very different from leasing in the sense that you’re making payments with the intention of owning the equipment. The equipment actually acts as collateral for the financing. You may be asked to come up with a down payment of up to 20% if you don’t have exemplary credit or if the equipment is particularly pricey.
These are more traditional term loans that must be paid back in a specified amount of time. Term loans involve borrowing an amount of money specific to the needs of the company. These are different from Small Business Administration (SBA) 504 loans that are better suited to smaller companies with fewer needs.
For established businesses who need equipment financing, a bank may be able to extend a revolving line of credit high enough to cover the cost of the equipment. This is highly dependent on their credit scores and on the consistency of their cash flow over a specified period of time. This is always an option for companies who haven’t been operating for more than two years. There are also a number of credit card companies who are willing to design certain cards specifically for small businesses. These are always worth looking into if the credit score of the business is high enough to qualify.
For more information on equipment financing options, contact Vankeith Commercial Capital. Their professionals have years of experience helping businesses to achieve their goals.