Today we will discuss how to get financing for new equipment in your business. Equipment financing is a very simple process that can easily be done within a few hours. In most cases, getting a loan for new equipment is as simple as completing a short application and waiting for a decision from your lender. To help you get started, we’ve created this guide to walk you through the process from start to finish. It includes all the information you need to know about equipment financing, including the steps involved in getting approved for equipment financing, what types of loans are available, and how much you can borrow.
What is equipment financing?
What is equipment financing and how can it help your business? Simply put, it’s the process of acquiring the necessary equipment to establish or expand a business. Equipment can consist of vehicles, machinery, medical equipment, computers, software and more. While some financing deals are similar to consumer finance deals—where you need to have a steady source of income—there are other options that don’t require any type of collateral. In this post I’m going to cover whatever equipment financing is, what types there are and who would be a good candidate for this type of funding.
When it comes to equipment financing, lenders and leasing companies look at a business based on the three key factors: availability of collateral, stability of cash flow and credit rating. Of these three factors, collateral is the most important for small business owners looking to finance equipment purchases.
Apply for a loan
Equipment financing from lenders is very easy these days. Simply fill out a paper application for a loan one time, and you can buy as much as $100,000 or more of expensive equipment from any company that will ship the equipment directly to your door. Other names for equipment financing include commercial equipment finance, capital leasing, operating lease financing, rental purchase, financial lease and equipment lessor. This type of financing has been a godsend for the machinery, trucking and construction industries. The ability to purchase equipment with a low down payment or no down payment at all has been a big help throughout those industries because now those professions can grow their businesses to any size they desire. You can get a loan in a few days with no collateral required. This is possible because the equipment you purchase is used as collateral for the loan.
What happens after I apply?
After an application is approved, the equipment financing company will get in touch with the seller to arrange the financing details. It’s encouraged that the equipment loan contract should be made between the lender and the seller. However, there are some occasions when you will have to sign a purchase agreement with the lender. This is mostly for just-in-time inventory purchase.
The equipment loan contract is the document that specifies the terms of the financing. Equipment finance companies normally don’t offer cost-free loan contracts. Instead they charge for their services. Some equipment loan contracts are more detailed than others, some are less detailed, but there are some elements that are mostly included in all of them. These are the main clauses of an equipment financing contract which you will have to see carefully when signing one.
The types of businesses that get equipment financing.
Typically, the type of business that gets equipment financing is one that has a significant amount of direct or indirect sales and operates 24/7. For smaller companies, the equipment is usually used to manufacture goods and services for sale to customers. For larger companies, the equipment may be used in running their internal operations. While businesses of nearly any type can get financing for their equipment purchases, some types of companies are more likely to take out loans than others. Below are two examples of common businesses that might need equipment financing:
Construction Companies
Construction companies often need heavy machinery and tools in order to get the job done. While some construction companies are able to buy their own equipment, others prefer to finance it as a means of adding efficiency to their business. Equipment financing is an easy way for businesses to cost-effectively purchase machinery and attract skilled workers from areas where those workers are needed most. Contractors know that they must have the right equipment in order to complete a project within a reasonable time frame. However, there is a difference between knowing you need equipment financing and knowing how to go about getting it.
If you’re a construction company owner who is having trouble making ends meet and growing your business, equipment financing might just be the answer. Regardless of why they need the money, these construction companies will probably all have to consider commercial equipment financing. While this may seem a bit daunting, it is actually quite simple.
Contractors
If you’re a contractor, you know the difficulties of obtaining financing for your business. The good news is there are other options out there other than a traditional bank. The bad news is that many contractors have no idea these applications even exist.
There are many different factors that will come into play with your application, including your credit rating, your business plan, your experience as well as the income you make each year. If you have the above information though, then there should be no reason why you can’t get approval for your loan.
As the economy pulls out of the recession, there’s an increase in demand for housing and for construction. And that’s creating opportunities for contractors who are looking to expand their businesses with equipment financing that makes it easy to get better tools, make money sooner, and grow your business
Conclusion
Equipment financing is generally less difficult to obtain than small business loans for operating costs and because you are being provided with the equipment to help drive your business forward, it also puts you in a stronger position to pay off the debt over time. Because of this, it’s important to have a clear plan in place to be able to return the equipment when the loan is paid off. Failure to do so will put you at risk of defaulting on your loan or suffering other serious consequences relating to your credit history.
Advantages of Equipment financing: You can obtain cash that would otherwise be tied up in inventory or other fixed assets; Obtaining equipment with reasonable payments that afford you the flexibility and financial capacity you need today and tomorrow; It provides working capital and improves your efficiency and productivity.
If you need equipment financing, please consider Rifi Capital. We do not charge to help you find financing and we are eager to help. Rifi Capital works with a wide variety of equipment financing providers and investors. This makes it easier for the buyer to “shop” for the best interest rate, terms and conditions that meet their needs. We want to help you find great financing so you can get busy, grow your business. To apply, please go to https://rificapital.com/apply or simply click the link.
