Whether you are running a business that is service or product-based, having the right equipment is crucial to keeping your business venture in smooth operation. Replacing, purchasing or upgrading equipment for the very first time could seriously put a pinch on your business cash flow but with the help of an appropriate equipment financing company, you can get the funds your business requires without making a huge dent in the bottom line. Equipment financing could take several forms and what is appropriate for your business might not be appropriate for the other.
Why Equipment Financing?
It has always been said that it takes money in order to make the money, but there are just some instances where having the funds required for crucial production equipment would act as a barrier to conducting your daily business activities. If this is the case, then it might be a good idea to seek the assistance of an equipment financing company since they will give you a lease or loan to help you get the equipment you will need for your business to flourish. In most cases, equipment financing companies mostly include credit unions, loan brokers, traditional banks and other different lending options.
What Should You Look For?
The truth about equipment financing companies is that they are all different. Some will need more paperwork than others, asking for previous tax returns and other crucial information while others will only need a credit check and a little more information to fund your business for equipment.
A majority of companies offer various plans for various organization types. For instance, your business will probably receive a different equipment financing plan than that of a 501(c) organization. There are equipment financing companies that will accept bad credit and let your equipment act as a collateral which can help you build your credit if you pay on good time.
There are also various payback options available from many financing companies. For example, a seasonal payback option would be ideal when your business is in its off-season. It is essential that you look at all these factors when looking for the right payback option. It is also advisable that you consider the type of financing a company covers, whether they provide Section 179 financing, the types of equipment they will finance and how much of your equipment they will cover.
The Types Of Financing
There are basically two options when one talks about equipment financing. There is the option to go for an equipment lease or equipment loan. With both options, the terms of financing and interest rates vary. An equipment loan varies from an equipment lease in that with the former, you’re the owner of all the equipment whereas, with a lease, the funder is the equipment owner. With some leases, the funder will ask you to buy the equipment after you have paid the lease.
The Covered Equipment
Every business has varying equipment need and equipment financing companies cover different equipment types. Reviewing the equipment covered by every company is an excellent idea so that you are conversant with the kind of funding you will need. Some companies will provide coverage for all your equipment while others specialize in specific equipment and organizations. Most equipment financing services will cover the total cost of the equipment but some will offer additional coverage for costs like installation fees and tax.