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Business Machinery

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Business Machinery

Your business has to deal with the never-ending issue of business equipment purchase or upgrading the existing ones. As machine technology progresses, there is always a new machine with better and more appealing features in the market.

To keep up with the competition or even gain an edge over them, get the latest machinery. However, at times, money stands in your way to acquiring it. In such a case, a business machinery loan from a local bank or a non-bank lender can come in very handy. Even when leasing machinery, you will still get this loan.

As a smart business manager, you should understand the value of borrowing money to purchase business machinery. First, you get the latest equipment that will most likely increase the generation of revenues to your business. You can then use the increased profit to repay the loan. What’s more, you will be improving efficiency without spending your savings on machinery.

Taking a business machinery loan is an effective way of empowering your business to acquire the latest, most efficient machinery that will ultimately improve efficiency and increase productivity. With the best tools of trade, you will definitely be steps ahead of your competitors. From office, farm machinery to restaurant items like ovens, there is a loan for every need.

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Benefits of business machinery loan

Apart from increased efficiency, convenient payment for the equipment and increased revenues, there are more benefits of business machinery loan to businesses and their owners.

It improves your credit score

Credit score is simply a number that lenders use to determine how creditworthy a borrower is. The higher the score, the more legible you become to securing loans. In fact, high credit score is one of the requirements to qualify for a loan.

Loans improve your credit rating in many ways. When you make timely payments, your credit score improves. The same happens when you successfully complete the loan payment. So, it’s very important that you complete payment within the repayment period. With a high credit rating, the buying power of your business, especially for future expenditures improves tremendously.

A high credit score is a reflection of an impressive financial history. Banks only give loans to borrowers with high credit score. However, other lenders will give you a loan even when you have low creditworthiness. It may be costlier, but it is a loan, and it less strenuous to get than a bank loan.

Owning the machinery

Even if you don’t have cash at hand to purchase the needed machinery outright, you can still take a loan and purchase the same right away. This way, the machinery becomes yours even though you didn’t have cash to buy it. This adds to the asset holdings of the business.

Mitigating risk

When you spend a huge amount of cash on machinery, you are subjecting your business to some element of risk. If you use all cash available to purchase business machinery, the business will take a while before it recovers that cash investment, and the business might not have enough cash to pay for its daily and monthly bills.

If you take out a business machinery loan, the business will shift its attention to equipment financing. This way, this risk is not going to be very high because there will be no free cash tied up in your new machinery.

Tax benefits

If you take a loan to buy business machinery, you will enjoy some tax relief. Some percentage of the profits that the business uses to pay the loan is usually exempted from tax. In short, loans come with tax benefits. You can discount against the depreciation, and this applies even to leased machinery.

What determines the repayment period?

Repayment period is never fixed. Several factors influence how long you will take to pay off your business machinery loan. The main factor is the monthly installment. If the monthly installment is high, the payment period will be short, and vice versa. Before committing yourself to any type of monthly installment, you should understand all the existing ones, and their terms and conditions.

Lenders will charge you a fee if you pay your loan before the expiry date of loan repayment period. On the other hand, you will be fined if repayment period expires before you pay your loan. Therefore, it is advisable that you clear the payment within the repayment period.

Requirements to qualify for the loan

You must meet some requirements for you to secure business machinery loan. If you are just starting up, the lender will require you to present a good business plan. Additionally, you should have some assets to act as collateral.

If you are looking for a loan to upgrade or add latest machinery to your existing business, then the lender will likely request to know your revenue. Other requirements include financial statements and tax returns.

Overall, lenders will ask you to make a certain percentage of payment in cash before they give you a loan. Above all, a high credit score is the main requirement to qualify for the loan, whether you are a startup or an established company.

Our small business financing experts are available to guide you through the funding Process.

 

At LCG, we fuse technology and the human touch to help lower search costs for borrowers and lenders while delivering better speed and customer service. LCG connects borrowers to a nationwide network of banks and lenders. Our team of dedicated funding specialists help borrowers get the right financing product and work quickly to help you secure the capital your business needs.
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Business Machinerykazaa 7:44 am January 30th, 2018