Your Quick Guide To Equipment Financing

If you’re looking to get new equipment for your business,there are a lot of ways to access the machines you need. While traditionalbusiness loans are widely understood, they aren’t the only game in town. Forsmall companies, they aren’t even usually the best deal you can get, and theycan have long application review periods. That being said, they’re popularbecause they have some great terms and they serve the companies they are madeto serve very well. Let’s talk first about how to get a traditional loan.

When you apply for long-term financing for an assetpurchase, you typically deal with fixed interest rates and amortizing payments.The down payment has to be substantial, between 25 and 35% of the total cost iscommon. You also need to include financial disclosures and a business planhighlighting how your company works, what it currently does for business, andhow the new purchase is projected to help you expand your volume of business.That means explaining what new options it brings your company, whether that issimply increased capacity for the work you already do or new work to add toyour menu of services for customers.

Traditional loans can take a few weeks to process, andsometimes as long as three months. They’re also usually not available to companieswith less than two years of operating history. SBA loans are another optionthat works similarly, but they are designed for the companies traditional loansdon’t service. Small companies whose financials don’t quite clear the riskhurdles banks impose but who are otherwise healthy find them very useful, andthe rates are among the best you will find. They can take even longer toprocess, and there are some limitations to the prepayment of your equipmentfinancing loans if you take this option.

Another possibility is to skip purchasing altogether. Byembracing a lease with terms that suit you, it’s easier to move into a returnon the investment. You also don’t have to worry about equipment disposal whenyou are done, and you can upgrade whenever your lease is up for renewal bysimply letting the old lease lapse and taking a new one out on an upgradedpiece of equipment. That makes it easy to rotate your machines so you’ve alwaysgot up to date, competitive tools at the disposal of your staff. There are anumber of efficiencies you pick up when you work with the right equipmentfinancing company, the key is finding the ones that offer you a deal you justcan’t resist.

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