Equipment Financing: A Few Ways to Get Ahead

Equipment financing often becomes necessary for small businesses as a means of staying competitive within the marketplace, and for providing better customer service to clientele. While there are several ways to go about financing a major equipment purchase, it may not be necessary for you to buy that equipment outright, if you can arrange for a good leasing program.

The advantages of leasing your equipment are that you don’t have to come up with a big down payment, and you don’t have to invest company funds in making a big purchase. It’s also advantageous to be able to simply turn in that equipment at the expiration of the lease, so that you can either get new equipment, or you can walk away from the lease altogether. If it is more beneficial to your small business to actually purchase the equipment and assume ownership, here are several options which you might consider.

Business line of credit

A business line of credit can be invaluable for your small business, and you can use it to purchase whatever equipment you need, as long as the cost of the equipment is less than your total line of credit. If you can obtain a business line of credit from a lender, you can also use the funds for any other kind of business expense you may incur, so flexibility is a big advantage of this type of financing.

Equipment loans

The biggest problem associated with equipment loans is that it’s often difficult to be approved by a traditional lender such as a bank. This is especially true when your small business has been in operation for a year or less, because there isn’t enough history for a lender to feel confident about. If you can somehow acquire funding from a traditional lender, you will generally get the best interest rates, as well as the longest repayment period.

SBA CDC/504 loans

The Small Business Administration makes available special loans which are exclusively earmarked for equipment purchases, up to a dollar amount of $5 million. These CDC/504 loans are somewhat easier to obtain than an equipment loan from a bank, but you’ll still have to obtain approval from the SBA itself. If approved by the Small Business Administration, that agency will guarantee a significant portion of any loan you can arrange with a bank. The backing of the SBA makes it much likelier that you will be approved for the equipment loan from a traditional lender.

Equipment financing through JNI Lending

If your small business is in need of a major piece of equipment to help you maintain a competitive position in your market, we may be able to help you achieve your objectives. Contact us at JNI Lending, and let our financial experts discuss options with you for funding that all-important equipment purchase.

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