Equipment financing is designed especially for the acquisition of small business equipment. When your company purchases equipment, it pays the full amount upfront and then makes regular payments towards the remaining debt over time. There are advantages and disadvantages associated with this type of financing. This article will provide information regarding equipment financing, and what to consider when you are in the market to obtain such financing.
One advantage of equipment financing is that you can easily get the money you need for equipment by leveraging your existing lines of credit cards. Equipment financing companies typically provide business owners with a streamlined application and approval process.
These companies make it simple to obtain equipment financing. Most equipment financing companies offer financing options that include cash payments, line of credit, and other loan products. These companies also work with small businesses to obtain the financing they need.
Another advantage of equipment financing is that you can obtain the money you need to acquire new equipment at a more competitive interest rate than you would get for new business loans. Equipment financing companies offer several attractive interest rates and repayment terms, which make it easier to obtain equipment financing for small businesses.
Equipment financing programs also generally have better closing and settlement procedures than most other types of unsecured business loans. This means that your company’s interest rates are likely to be lower than you would get with many business loans.
One disadvantage of obtaining equipment financing is that there are often upfront payment costs. For most business owners, equipment purchases are made on a short-term basis, usually for one or two years. During this period, these owners will make monthly payments toward the total cost of the equipment and may make one or two additional payments at any time as well.
In many cases, these owners may receive all of their payments in one lump sum, but they may also receive payments sporadically throughout the life of the equipment. If you have a good cash flow and good credit, you should be able to obtain equipment financing with minimal payments and fees.
Many online lenders specialize in providing equipment financing. Using an online lender offers several advantages: you are often able to shop for the best possible interest rates, terms, and conditions; you can apply from anywhere in the world; you can obtain pre-approval for a larger number of loans; and, because you negotiate with fewer financial institutions, you can obtain higher interest rates and more flexible terms than you would obtain by dealing with local banks and traditional lenders.
Be sure to check the financial ratings of any online lender you are considering using before you submit your personal information or agree to any loan terms. Some online lenders will require you to fax through your credit report to verify your credit, while others will not check your credit at all.
You can save quite a bit of money when you use a local lender to obtain your equipment financing instead of seeking finance from an online lender. Because you meet with the lender face-to-face, it is often easier for you to negotiate attractive terms. Also, your bank, credit unions, and other lenders typically prefer to work with individuals rather than groups.
Since individual lenders deal with your finances daily, they are used to dealing with people and are usually willing to work with you on better terms than an institution will be able to. However, you must use due diligence when comparing various lenders to make sure that you are getting the best deal for your needs.