Equipment Financing
How it works
Equipment financing can be arranged for any type of business equipment. The type of equipment and its condition
will dictate how much a company can borrow on an equipment loan. Just like a consumer car loan, equipment loans
for a business will vary in their cost based on the equipment’s age, its new or used condition, and the length of time
the equipment is expected to be in use. A rusted out old Yugo will not be financed at the same rate as a shiny new Lexus. Just as with a car loan, the equipment bought with the loan funds will be the collateral for the loan.
As with any loan, the lender will want to review the company’s credit rating. The history of the business’s cash flow, and the company’s balance sheet may also be requested as part of the loan application package. Some lenders will want to speak with a few different credit references for the business, including the company’s bank. For newer companies which don’t have a long credit history built up, or established companies that don’t have a great credit history to reference, the equipment loan can be a good solution to access growth opportunities. Unlike a signature loan, the collateral securing the note is the equipment, which means the lender can be more forgiving about approvals.
WHAT IT COSTS
Interest rates for equipment financing programs are usually fixed, currently ranging between eight and thirty percent. The payments for the program stay the same over the length of the program. The term, or length of the program, will generally be set based on how long the equipment is expected to be in use.
It’s not unheard of for financing companies to charge a small fee for the program, the bulk of the cost of the program will be repaid as interest in the monthly loan payments. For instance, financing in the amount of $10,000 for a thirty six month term at twelve percent interest would be have a total cost of $11,957.15.
The cost of the program is $1,957.15. Assuming that the business expects to gain at least that amount of business as a result of the financed equipment, there is no good reason not to finance it. Repaying the monthly payment of $332.15 should be within the reach of the company, assuming that the equipment creates or supports new business as expected.
QUICK AND SIMPLE PROCESS, FROM QUOTE TO FUNDING.
GET A QUOTE
Enter some basic information to get a free, instant quote (no credit check) or fill out a single, free application
APPLY
View quotes, apply for one, some, or all options and receive instant conditional approvals
SPEAK WITH A SPECIALIST
Review options, opportunities for growth with a funding specialist and get final verification
