Equipment is vital to business operations and ongoing development. When a piece of machinery breaks down or a computer system needs to be updated, small business owners can choose to take out an equipment loan as a smart alternative to traditional cash loans.

Understanding Equipment Loans

An equipment loan is used specifically for the item being purchased and uses that item as collateral. It’s usually offered as a financing option by the company selling the equipment, or as more relaxed option from another lender. If the borrower defaults on the payments, the company can repossess the item they financed—making it a lower risk option for everyone involved.

The Advantages of an Equipment Loan

This type of loan is good for smaller businesses, or for those with a less-than-perfect credit history. There are a number of advantages to an equipment loan, including:

• Less Paperwork: Other business loans require documentation showing at least two years of consistent profit. Equipment loans are less risky and have more relaxed standards for both credit and length of operation.
• Always Stay Up-to-date: Receiving financing for a specific piece of equipment can give even new businesses access to high-tech options that they couldn’t otherwise afford.
• They’re Less Expensive: Financing equipment can be done at a lower interest rate than traditional loans. The transaction is essentially secured by the equipment, and companies are able to finance 80-100% of the total cost with no down payment and flexible repayment terms.
• No Waiting: Most lenders who provide equipment loans can give you same-day approval after you apply. This can give businesses time to prepare for the new equipment or to find an alternative if they aren’t approved.
• Your Business Increases in Value: With the addition of cutting-edge equipment, the value of your business grows. This can help you to obtain future unsecured loans and to improve your financial situation as a whole.

If you need help navigating your financing options and growing your company, call the experts at JNI Lending. We can offer you financial solutions as unique as your business.