Equipment Financing can be an important asset to a business owner

 

  • Exactly What is Business Equipment Financing?

Equipment financing is a type of small business loan used primarily to purchase business equipment like computers, machinery, vehicles or most any business equipment. Business owners may use the new equipment as collateral for the loan, making equipment financing a smart way to preserve on-hand cash.

 

  • What Are Qualifications for Loan to Finance Equipment?

Qualifications are generally similar for equipment financing as for many other types of small business loans. Lenders will consider the business owner’s personal credit score, length of time in business, repayment history and company cash-flow.

However, one of the advantages of equipment financing is that you get to use the equipment that you are financing as collateral. This way you do not tie-up other collateral or free cash flow to make needed equipment purchases.

 

  • How Does Equipment Financing Work?

For many small businesses, you may finance equipment up to 100% of the value of the equipment. Most lenders will set the term of the loan equal to the expected useful life of the equipment. For example, most computers and software have an expected useful life of 3-5 years.

 

  • Interest Rates for Equipment Financing

Like other loans, interest rates will be determined primarily by the credit worthiness of the individual owner, the asset being purchased and the health of the business. Interest rates can vary greatly, anywhere between 8-30%, so it is very important to present your best foot forward when submitting your credit application.

Questions about Equipment Financing? Call us at SFG, we can walk you thru the simple process and we are sure you will be pleased with the results.