Equipment is a vital component of many businesses. Whether you need computers, manufacturing equipment, construction equipment, vehicles, or something else, you may be looking for a way to pay for it. Using the money that you have could stretch your cash flow too thin. You could apply for a loan, but a loan may not meet your needs (or you may not qualify). Another option to consider to meet your needs is equipment financing.
What is Equipment Financing?
Equipment financing is exactly what the name suggests – financing that enables you to purchase the equipment you need to run your business. With financing, you can preserve your cash flow, which allows you to continue meeting the other needs of your business without squeezing your budget too tight.
What Can It Be Used For?
Financing isn’t just for manufacturing equipment, construction equipment, and farming equipment. Other uses include:
- Computers and software.
- Commercial fridges, freezers, and ovens.
- Solar panels.
- Delivery vehicles.
How Does It Work?
Financing for equipment ranges greatly. Depending upon the lender (and your needs) you may be able to qualify for up to $5 million. Terms and rates vary. Terms typically range from one to five years, and interest rates can start as low as 7.5%. The equipment functions as the collateral to secure your financing.
Repaying your loan isn’t unlike repaying a traditional business loan. You make fixed monthly payments until the balance of your loan (plus interest) is completely paid off.
How Do I Get the Financing I Need?
In general, you need a credit score of at least 650and an annual revenue of at least $400,000 to qualify. Getting financed through a traditional bank can be difficult (although not impossible). Bank financing often involves a significant amount of paperwork and it can take a few weeks to get your money. Approval rates are also fairly low.
Fortunately, you have other options. Online alternative lenders often have fewer requirements and less paperwork. You can often complete an online application in as little as 15 to 30 minutes. It also doesn’t take nearly as long to get the funds you need. Some companies can disburse funds in as little as just a few business days.
With equipment financing, you can get the funds you need for the equipment your business needs to run properly. This allows you to maintain your cash flow, allowing you to continue meeting the other needs of your business as well as your business goals.