How to Get Equipment Financing
What it is
| At a Glance | |
|---|---|
| Loan Type: | Business |
| Lender: | Bank |
| Secured: | No |
Equipment financing is when a small business borrows from a financial institution in order to purchase machinery or equipment. The purchased equipment is then used as collateral against the loan. This is a preferred method of financing because it provides the equipment, software or furniture that a business needs without tying up cash, receivables, credit cards, or bank lines. The purchase of equipment can also be expensed for a tax deduction. Many financial institutions can provide three- to five-year terms or even 10-year terms.
Similar to equipment financing is what is known as equipment leasing. This is a type of equipment financing that is done through a leasing company. The lessor will purchase the equipment from the vendor and lease it to a small business. This method of financing allows the small business to obtain the assets it requires at lower monthly payments. Equipment leases are generally fixed for three to five years. At the end of the lease period, the equipment is either returned to the leasing company or purchased by the small business.
Who it's for
Many small businesses find themselves in need of a business loan at one time or another for a variety of reasons. Equipment financing is a good option for any business that needs new or updated equipment but cannot afford to fully pay for such. It is particularly handy for businesses that need to keep some capital free for other expansions or investments.
What you need to do to apply
To apply for equipment financing, you will only need to fill out an application form, provide business and/or personal tax returns, and have a credit check performed. A financial institution or equipment vendor will be able to walk a business person through the process and answer any questions.
Apply for Equipment Financing
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