As a business owner, getting your operations up and running, and keeping them running smoothly, may feel like a chicken-and-egg scenario — you need equipment to generate cash flow, but you don’t want to disrupt your cash flow to buy equipment. Luckily, there’s an answer: equipment financing.
Equipment financing, whether through an equipment loan or lease, can get you the electronics, tools and machinery you need to improve your operational efficiency and drive your company’s growth.
Barrington Commercial Capital provides innovative funding solutions to empower businesses to experience growth and success. Our skilled team can help you secure flexible financing that suits your individual needs.
Equipment financing comes in the form of a loan or lease that you can use to purchase mission-critical equipment for your business, whether it’s computer hardware, heavy machinery or company vehicles. Taking advantage of this type of financing allows you to retain your competitive edge while preserving your working capital and cash flow.
There are two primary types of equipment financing to consider:
● Equipment Loans: The equipment’s value is used as collateral for the loan. Once you pay off the loan, your company will own the equipment.
● Equipment Leases: This is a long-term rental agreement between your business and the owner of the equipment. At the end of the lease term, you’ll have the option to buy, return or continue leasing the equipment.
As useful as it can be, equipment financing is a significant obligation that requires careful consideration of your needs and favorable financing terms.
The amount you can borrow through an equipment loan can vary based on the items you need to purchase. Some lenders finance 100% of the equipment since it secures the loan. Others may require you to pay 10–20% down on your loan.
If your company is in a cash crunch, an equipment lease might be a better option, as it doesn’t typically require a down payment.
Interest rates for equipment loans can run from 2% to 20%, and the length of the loan or lease term can be anywhere from several months to 10 years. The term usually aligns with the life expectancy of the equipment.
When you apply for equipment financing, you’ll need to show the lender:
● A solid credit score
● Your business financials
● Specifications of the equipment
The lender will evaluate both your personal and business credit, so consider that when you sit down to strategize about purchasing equipment for your company. They’ll also want to know how long you’ve been in business, the term of the loan and how well the equipment might hold its value.
If you fail to qualify for a loan, an equipment lease might be a solid fallback option.
Whether you’re launching a startup or running an existing business, equipment financing might be worth considering. Barrington Commercial Capital can provide the funding that helps your business grow, compete and thrive. Contact us today to learn more.
