Without the right equipment, it’s difficult for any business to succeed. You might get away with old, outdated equipment for a little while, but you will need more equipment and upgrades as your business grows. Fortunately, several options are available for equipment loans and financing, ranging from traditional bank loans to renting.
Who exactly qualifies for equipment financing? Different lenders and banks have different requirements, but most will ask for an excellent personal or business credit score and a decent history of revenue generation. They may also expect you to have been in business for a year at the very least. Suppose you don’t yet have any business credit. In that case, you still might be eligible for some funding if your credit is good.
An SBA loan will be different. These generally require that a candidate has excellent credit, positive cash flow, and 4+ years in business. You might be better off looking into alternatives such as a personal loan, equipment rental, or a term loan for a small business.
It’s essential to understand the difference between equipment leasing and equipment financing. With the former, you are only renting the equipment, and with the latter, you get to own it. Just like with a car lease or purchase, in that, you “own” the car and get to keep it permanently after paying it off with a purchase, and are only renting the vehicle with a lease.
Equipment Loans and Leasing
The plus side of equipment leasing is that as long as you take good care of the equipment you are using and make payments on time, you will get the opportunity to upgrade it to a newer model. Also, there is usually no down payment required. However, you might end up paying more money over time if you lease equipment instead of purchasing it outright through equipment loans. So weigh in your options carefully.
Term loans are similar to traditional business loans, and you can use the sum to help purchase equipment, as well as other things your business might need. However, depending on how this type of loan is structured, you might need to offer up some collateral in addition to – or instead of – the equipment.
A business line of credit is pretty self-explanatory. Just like a credit card, there is a revolving line of credit (as long as you make payments on time) over time, instead of one large lump sum.
Whichever of these types of equipment loans, leasing options, or business credit options you are interested in, you can learn more at SuperMoney. In addition, there are flexible custom financing solutions for you to look into.