Business Office Equipment
One of the most critical needs of a small business is equipment some of which could be software or hardware to heavy equipment. Even if your business is a few or many years old, you will eventually need to replace some of the equipment. Now, these types of equipment can be too expensive to buy, and anyway, they depreciate so fast. Equipment Loan is the best way to go about it conserving cash and protecting from obsolescence. The best thing about equipment leasing is that you also enjoy tax benefits and the low monthly payment it affords you, same as the person that buys the equipment, most of these transactions will not appear on personal credit since it’s a business loan.
Whether you decide to lease, borrow, or buy, you will find yourself in need of an equipment loan that is more easily accessible now than ever before. Getting the right equipment loan can be easy or hard depending on many things. If you do not have to fork out the money to buy equipment out of your pocket, then you can have more capital to invest in other areas of your business. However, what do you know about business equipment loans is that many benefits your business can take advantage of especially if your business is equipment intensive business such as construction, manufacturing, trucking, medical or even for restaurants all covered under equipment loans and leases. Call us today 619-695-1244.
The equipment is the collateral
One of the most critical needs of a small business is equipment that generates an asset for the company. Even if your business if it’s only small equipment it can have some impact in your balance sheet. Now, some equipment can be too expensive to buy cash outright anyway, so the only viable option is to finance it. Equipment Loan is one way or equipment leasing is another depending on your business tax preference as they depreciate fast. Leasing is the best way to go about it many reasons that will not be covered here today. The best thing about equipment leasing is that you also enjoy tax benefits.
So what happens when you default on payments?
A lot. For example, consider the business equipment start depreciating when you get it out of the store. Now, depending on the depreciation rate, you may have to pay the financier the difference in your own money because even if they repossess a piece of equipment, they may not sell it at a price that would allow them to recover all the money that you owe them.
One important thing to know
Most startup business owners wonder what happens to the equipment as it gets older. For example, because of the dynamism experienced in the technology field, many types of equipment become obsolete in a few years. They are replaced with newer and better equipment.
If you should need to trade in the older equipment and get newer ones, you should discuss that with the financier of the equipment. That, loan duration and other details should be discussed prior to putting your name on the dotted line.
Increase your business efficiency
Consider the amount of work that a packing machine can do for your business and then think of how much money you could lose if you opt to stay without one. Your competitors have all the equipment they need. However, as a startup, one thing that will always put you off is just how costly the equipment can be. With the business loan for equipment, you need not hamper your operations.
When hunting for a lender for equipment loan, ask whether they let you defer on the loan in the first 90 days of taking the loan. If this is available, you should take it. It is one of the questions to ask when taking out this loan.
How much will the loan cost you?
This depends on a few things among them the credit score of the business, the owner’s business score, the creditworthiness of the business and so on. What we mean by creditworthiness is whether you have established lines of credit and whether every transaction has been reported to the credit rating bureaus.
Usually, the interest of the equipment loan is 5% to 9%. If you have good credit score, you may get it at very friendly terms.
There are other charges though. For example, there is an origination fee that differs from one lender to another. It should not be too big.
The loan repayment term depends on a few things. One of them is the shelf life of the equipment that you are buying. The next one is the type of the equipment and its cost. Usually, the payment duration is 1 to 5 years, but some heavy, industrial equipment may be allowed to stretch for up to 10 years.
Being one of the most sought after small business loans, you will be required to put down a down payment. Most lenders ask for 20%, but if you have very good credit and your business creditworthiness is high, you could be required to put down a payment of even as little as 5%.