Whether you’re starting up a new business or maintaining an older one, having to replace or repair your equipment can be an expensive and stressful process.
If you don’t have the money to purchase the equipment yourself, don’t worry. There are resources out there to help you when you find yourself looking at a very expensive business speedbump.
Best Options for Equipment Financing
There are a number of ways in which you can get financing for your business. Finding the best equipment loan for your company is important to ensure that you don’t accidentally choose one that won’t work well with your business.
Luckily, there are several ways that you can purchase your equipment on finance. Make sure that you look into each of these to ensure that you’re choosing the best option for you and your company.
1. Business Equipment Loans
A business equipment loan is one of the most straightforward ways to get money for your equipment. You’ll receive a lump sum of money to use for your equipment and pay it back, along with interest, over a number of months.
2. Hiring the Equipment
Some equipment can be hired out for a weekly or monthly payment until you have paid enough to own the equipment yourself.
This has its benefits and drawbacks, but hiring the equipment allows you to use it even if you don’t have the money for a lump sum payment right away.
3. Operations Leasing
You can also lease equipment from other businesses. This is ideal for companies that don’t need a piece of equipment for very long, preventing you from wasting money on purchasing it for only a short-term requirement.
4. Cash Advance from Merchants
If your business is likely to get enough traction from the public, you can start a funding project in which future customers can invest in your business to give it the best starting push possible.
You can use this cash advance for whatever your business needs most, although most funding projects are for equipment.
5. Business credit cards
You can apply for a business credit card to use for expensive purchases such as equipment. Bear in mind that you will need to keep up with repayments to avoid getting into trouble.
Failure for repayments can also lower your credit score which can also lower the likelihood of you being able to get another business loan in the future.
6. Asset Finance
Asset finance allows you to get equipment paid for by a lender so that you can get the equipment quickly.
You will then repay the lender, either with or without interest depending on your agreement. Family and friends are common sources of asset finance.
Once you pay off the loaned amount, the equipment can become the property of the business.
Let’s Focus on Business Equipment Financing
There is such a thing as business equipment financing which is a type of business loan that allows you to borrow the required amount of capital specifically for equipment.
This is a great loan that allows you to spend more of any other business loans on other aspects of your business.
Equipment loans can be a lifesaver for many businesses. Equipment is always needing to be replaced, repaired, or updated.
A common misconception about starting a new business is that you don’t have to worry about budgeting for it once you purchase your equipment.
However, this is not the case for many businesses. You’ll often need to plan for contingencies occurring for your equipment.
If you overlook this factor, you might find yourself at a loss when your essential equipment falters in the middle of an incredibly important order.
A business equipment loan allows company owners to keep their assets up to date without having to spend lots of money from their own pockets.
Some people don’t have enough profits to pay for their equipment without a loan, which is why the equipment loan can be such an amazing opportunity for many businesses.
How to Get a Business Equipment Loan
If you’re eligible for an equipment loan, you can get the money within a matter of days. Some lenders will even give you the money within 24 hours.
This is excellent for operational businesses who need the equipment as soon as possible to avoid getting behind on orders.
There are plenty of lenders that are willing to put up the money for your business, from financial institutions to venture capitalists and other private lenders.
There are many sites online that allow you to compare lenders for business equipment loans, ensuring that you get the best deal for your company.
Another option is to ask friends and family to loan you the money for new equipment. If this is a viable option for you, it might be worth looking into as interest payments will likely be lower than for a bank or private investor.
How do equipment loans work?
An equipment loan can be used for all sorts of equipment when it comes to your business. This could be like heavy machinery, computers, vehicles, and any other expensive equipment that you will need.
Once you have spent your equipment loan on everything you need, you will then need to pay the loan back to the lender with interest in scheduled monthly repayments.
When you’re a startup business, a piece of equipment going bust has the potential to drag your business under. You cannot make orders, you won’t be making your profits, and you’ll need to spend a lot on a new piece of equipment.
If you don’t have the money for this, you might need to take extra from other places in the budget. For example, your marketing, staff salaries, and stock budgets might take a hit from you needing to replace your equipment.
This will open a whole lot of new problems for you, and you might find that your staff is unhappy with their wages being cut and leaving you without workers.
You might also not have enough stock to use to make a profit. Your marketing strategies might also fail due to there not being enough budget to enhance them.
All of these issues can accumulate and create an even larger issue of you struggling to break even, eventually leading to your business failing and going under. Of course, this is a worst-case scenario - but it does happen.
Luckily, the equipment loan is a popular choice of loan to apply for. You don’t just need to be a startup company to apply for the equipment loan - you can apply whether your business is one year or ten years old.
Some businesses choose to apply for an equipment loan every few years so that they can replace and update all of their equipment at the same time.
This can keep the business running as smoothly as possible to keep you growing and making impressive profits.
A Little More About Equipment Loans
An equipment loan is an unsecured loan, meaning that you don’t have to put up any collateral to get the money.
This is helpful to many business owners as they won’t need to stress about paying back the money on time or losing some of their assets.
An unsecured loan takes a lot of the pressure off of the business and also helps you to get the money faster.
The point of an equipment loan is to get you the money as quickly as possible to help you keep your business going in unforeseen times of struggle.
An equipment loan can provide funding anywhere between $1,000 and $500,000, depending on what you need it for.
You might also need to prove that you require the amount of money if you’re looking for a loan on the highest end of the spectrum.
Loans on the higher end might also take longer to acquire, and in some rare cases, this will turn the loan from unsecured to secured.
Your interest rate will be agreed upon before the money is offered and you will pay it back in small monthly installments until it is all paid off. The higher the loan, the longer this will take.
Equipment loans can cover anything from specialist machinery to catering supplies. Anything you need that can be classified as the equipment is covered by a business equipment loan.
You can get these loans from family and friends, venture capitalists, and financial institutions such as banks.