What You Need To Know About Equipment Financing
Businesses of all sizes depend on equipment to keep their operations running smoothly. The costs of purchasing, repairing and upgrading equipment can be a burden, especially for small business owners with little working capital. This is why many turn to equipment financing for help. Equipment loans and leases can provide you with money upfront to help you get the equipment you need quickly. If you are planning to apply for financing, consider the information below.
Know the Difference Between Loans and Leases
The first thing you have to decide is whether you want to apply for a lease or a loan. Equipment leasing often does not require a down payment and offers more flexibility when it comes to upgrading equipment. A lease means you do not own the equipment and can keep or return it once your term is finished. A loan will require a down payment and allows you to purchase the equipment you need upfront. With a loan, you own the equipment outright.
Check Your Business and Personal Credit
When you apply for equipment financing, lenders will check your business and personal credit score. Lenders will be hesitant to lend you money if you are deemed a risky investment. The quality of your credit could also determine the interest rate on the amount of money you receive. Before meeting with potential lenders, check your credit scores and come prepared to discuss any issues like late payments or outstanding debt.
Secure Your Down Payment
An equipment loan or lease will likely require a down payment before you can receive any working capital. The size of this payment is dependent on the terms of the agreement between you and the lender. You can often negotiate the amount based on the needs of your business. Make sure you discuss these details before signing any paperwork so you can budget properly and acquire enough money for your first deposit.
Budget for Monthly Payments
Equipment financing will require you to make monthly payments until your balance is paid off. Planning for these ahead of time can help you keep your business’ finances in order and prevent you from missing payments. Once you have set the terms of your loan or lease, refer to your business’ monthly budget and factor in the cost of these installments. Make sure you account for interest rates, as well.
Equipment financing can help you get the things your business needs quickly and easily. Use the tips presented in this guide to help you get started.