What is Equipment Financing?
Many businesses operate using expensive machinery, such as tractors, ovens and fryers, medical equipment, and sophisticated computers and copiers. When those machines break down or technology standards move beyond your current systems, the business can’t do the work necessary to generate their income until the equipment is fixed or up to date. But, without the right business equipment, the money to fix them isn’t coming in. It’s a vicious cycle that often can only be fixed through equipment financing. Equipment loans are used to finance new or used equipment. Whether your business needs to replace faulty machinery or simply wants to upgrade to more modernized and cost-effective equipment, leasing and loans through equipment financing are the smart way to invest. Because the borrower is purchasing equipment as an investment, and therefore, collateral, the risk to the lender is reduced. If the borrower defaults on the loan, the lender still has a way to recoup some of their finances.
The terms are either in the form of a lease or a loan. They are often more lenient, too, frequently allowing borrowers up to 60 months to pay the equipment loan back in fixed monthly payments.
In fact, equipment financing for small businesses is one of the most common types of loans seen throughout all industries. Most businesses need some form of equipment to run, even if it’s just a computer. More often than not, though, it’s very normal to see a business finance sophisticated technical software, machinery, office furniture, cubicles, store shelves, and many other items.
The Ins and Outs of Equipment Financing
The basics of equipment financing are quite simple. This type of loan is used to buy equipment that is integral to the operation of a business. Whether that be a vehicle, an MRI machine, or a conveyor belt — the types of machinery, tools, or equipment that keep businesses afloat is vast. Equipment loans allow for recurring payments with interest and principal included over a fixed loan term.
This type of financing is low-risk for creditors because the equipment acts as collateral against your debt, making payment stipulations less exhausting on lenders. Once payment has been fulfilled, you’re able to own the equipment — giving you freedom and more cash flow options throughout the rest of your business.
Equipment financing and equipment leasing have some unique differences. Leasing has payback schedules of around 60 months, and equipment is eventually returned to the owner after payment and loan term have been completed. The qualifications for leasing are less rigorous, which makes this option a better fit for some business owners. However, financing is a far more long-term solution that focuses on the investment of equipment. While leasing may be easier, financing enables ownership which can be a more cost-effective option in the long run.
What are the Features of Equipment Financing?
With financing through AdvancePoint Capital, small businesses can be approved for a lease or equipment loan ranging anywhere from $500 to $150,000. The approval decision can even happen within seconds for loans under $10,000.
To find out if you qualify, all you need to do is complete the simple one-page application and provide the information on the equipment that you are looking to purchase. Regardless of your credit, you can be approved for this type of business loan because the collateral is an automatic part of the borrowing process.
Financing your equipment needs through AdvancePoint Capital includes features and benefits such as:
- Up to 100% financing of the equipment that you need in order to improve your business’s success and get you back up and running if your machinery has broken down.
- Costs are based on the Principal & Interest Rate or Factor Rate.
- Approval of your loan application in as little as 2 days and sooner for smaller loans under $10,000.
- Competitive terms with financing up to 60 months for many loans.
Loans through traditional bank financing can be difficult to be approved for. You have to jump through hoops, provide extensive documentation, have excellent credit, and wait weeks or months for a final decision and access to your money. The requirements can be demanding and may not work for you or your business. During that time, your machinery may not be working cost-effectively or may not be functioning at all, costing you hundreds or thousands of dollars every day.
The qualifications involved in equipment loans aren’t necessarily complicated, but they are important and should be considered before attempting this option. While all lenders work differently our qualifying standards involve three main components. First, your personal credit can play a significant role in obtaining the equipment loan you need. Online credit ratings can help give you an idea of where you stand and how high or low your credit may be. Where your credit lies can impact how good your loan term can be.
You’ll also need to provide proof that your business has been around for at least six months. The best way to do this is with a business plan. Obtaining equipment loans means lenders will want to know that your business is established and has a plan for growth in the future. A general summary of your business gives lenders the opportunity to see how long you have been in business and a basic look into your revenue figures. Here at AdvancePoint Capital, we require that your business has been established for at least six months.
The last qualifying factor we require here at AdvancePoint Capital is documentation that outlines the type of equipment you need along with information about how it will benefit your business. Profit and loss statements are a common way to illustrate how certain equipment can affect the influx of productivity, revenue, or success of your company. Business owners should be prepared to show how an equipment finance solution can continue to bring money in the door.
At AdvancePoint Capital, you can get quick approval through minimal paperwork if you qualify. To qualify, you should have at least:
- Good credit, although all credit types are considered,
- Have been in business for a minimum of six months,
- Provided documentation of the type of equipment you need and how it will help you succeed in your business.
|Eligibility Requirements for Equipment Loans:|
|Application||A Simple one page application|
|Credit||All credit Considered|
AdvancePoint Capital equipment loans are a great solution for the lowest possible interest rate. Payment options are flexible and lenders are far more likely to consider this option knowing that the risk is relatively low. You’re able to lease or own the equipment, which makes it one of the more flexible business loans around.
Here are some of the incredible features that equipment financing has to offer:
From $500 up to $150,000
Decisions in seconds under $10,000
Up to 60 month leases
AdvancePoint Capital is the fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form
What is Needed to Apply for Equipment Financing?
Each type of financing has its own requirements, but in general, minimal paperwork is necessary. Compared to traditional loan options, there aren’t loads of additional requirements or application stipulations. To apply for equipment you may need:
- Your financial statements
- Monthly bank statements
- Your personally identifiable information such as a driver’s license
- Your one-page application
- Your credit score (although all credit scores are considered).
Is Equipment Financing the Right Option for You and Your Business?
As a small business owner, you may frequently find yourself juggling many financial responsibilities. Managing your working capital so that you can get through each day may require one type of business loan, while renovating and rebuilding requires another. The various loans, payments, and lenders can add up — leaving certain business needs to fall to the wayside. However, this particular option allows you the freedom to separate business loans from equipment loans.
Equipment financing is a totally different financial product and should only be used if your large machinery breaks down and is integral to running your business — or if it would be more cost-effective to spend money on better equipment to save money in the long run. For industries like healthcare, manufacturing, agriculture, restaurants, or those that rely heavily on costly machinery or technology — an equipment loan offers a perfect solution.
Check out How to Find the Best Small Business Loans to weigh all the benefits and evaluate the decision to get funding for your business.
The fast, convenient and straightforward way to get the money you need for your business – now! Get your Quote Today by filling out our simple form.