What can you do if your business needs an important piece of equipment to stay competitive in your market? It’s true that your company probably doesn’t have sufficient working capital on hand to buy large business equipment outright, but that doesn’t mean you need to fall behind. With equipment financing, it’s possible to work towards owning the best equipment without putting your business under financial stress. Why is this type of financing ideal for many businesses?

The Benefits of Equipment Financing

This option allows you to purchase equipment for your business. You’re not leasing it or renting it temporarily. With an equipment loan, your monthly payments go towards full ownership. Here are several reasons why this purchasing option is attractive to many companies:

• Valuable collateral. Owning equipment means you can use it as an asset for future financing. For example, if you need to secure a real estate loan to buy your own business property in the future, the equipment you own can act as collateral. This can make it easier to qualify and help you obtain lower interest rates.
• Control over the equipment. While leasing does have certain advantages for business equipment, there’s one area where ownership truly excels: the ability to decide how to use your equipment. As the owner, you decide who should perform maintenance and how often. You can operate the equipment on your own timetable. This may allow your business to take on projects that wouldn’t be possible otherwise.
• Prime interest rates. Purchasing machinery via equipment financing costs less in the long run than leasing. In exchange for slightly higher monthly payments, you can obtain long repayment terms and low-interest rates.

These benefits are one reason why many businesses, both large and small, opt to purchase heavy equipment using a loan rather than lease. This option is ideal for pieces of equipment that are intended to last a long time. In this situation, ownership provides an extra perk. Once you’ve finished buying the equipment, you never have to worry about payments for it again.

The Type of Equipment That Works Well With Financing

Some kinds of equipment adapt well to leasings, such as computers and other devices that require frequent upgrades. Long-term, heavy-duty machinery is a better fit for loans. Construction equipment, restaurant appliances, manufacturing devices, assembly lines, production equipment, and service equipment are all perfect for financing. As long as you have good credit and sufficient time in business, qualifying for an equipment loan is relatively easy.