Business Loan

Business Equipment Financing Guide to Term Loans, Leasing, Credit Requirements & Alternative Solutions

There’s always equipment to deal with for any business owner. All businesses, large and small, have some equipment, from computers to conveyors. Even if you’re running things at your small home office, you’ll still need standard office equipment. Since it can be expensive, how can you obtain everything you need to run your operations smoothly? What kinds of business equipment financing assistance are available?

Getting a loan is a traditional option. A typical business loan, assuming you qualify for one, should help cover your equipment expenses. If your current equipment needs upgrading to help meet growing needs, you will hopefully have enough cash flow. If not, then consider applying for a new loan. Whether or not you’ll get a loan for the amount you need will be determined by your business credit history and probability of being able to pay the loan off in the future.

If you don’t have good credit and can’t get approval the traditional way – don’t worry. There are alternatives, like equipment leasing. This option allows you to rent the equipment, with the possibility of someday purchasing it. The good thing about equipment leasing is that you don’t need a large down payment and collateral upfront.

Business Equipment Financing Without a Loan

Not getting a traditional loan doesn’t mean that you necessarily have to rent the equipment, unless you’re OK with the idea of renting. Some lenders are less strict and will offer business equipment financing solutions to start-ups.

Equipment loans tend to have lower rates and longer terms than traditional working capital loans do. This fact can help keep the overall costs of the equipment down. Keep in mind that business equipment loans usually require monthly payments. In contrast, cash flow loans require that you make a payment every week.

You might be able to work out a deal with the lender that involves putting the equipment you want to finance up for collateral. It is possible to get full 100% financing initially. However, some of the lenders will require that you put up a down payment – usually around 20%.

Term loans are available for established businesses that have consistent revenue and need to borrow a higher amount, all the way up to $1 million. For a term loan, you’ll need to have a good credit score, usually 660 or higher, and generate $200,000 or more in annual revenue.

There might be other options that will better suit your business equipment financing needs, such as a business credit card. Learn a lot more about how to afford the equipment your company needs at US Business Funding.

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