Funding Your Startup: Are Business Equipment Loans Worth it?
Launching a startup comes with certain challenges.
These include finding mentors, choosing the right idea to pursue, hiring and managing a team, attracting buyers, and of course, limited resources.
The good news is if your number one concern at the moment is getting funding for much-needed equipment, there are business equipment loans that can help. Here, we’ll talk about how equipment financing works, how to qualify for a loan, and your options for obtaining one.
Equipment Financing: The Basics
From IT equipment to manufacturing machinery to restaurant ovens and so on, there are a lot of business items that an equipment loan can help pay for.
This is what makes equipment financing so appealing to small businesses and startups. Since buying equipment outright can be expensive, it’s not an option most small business owners or entrepreneurs go for because they know it will put a strain on their cash flow.
Small business equipment loans, on the other hand, come with flexible terms and funding is fairly quick. You can get the amount you need to obtain, replace, or upgrade equipment in as little as two business days.
There’s also the added benefit of improved credit. Of course, this is only possible if you make on-time payments. Otherwise, you’ll be putting your business credit score at risk.
Qualifying for Business Equipment Loans
The requirements for getting a business equipment loan vary from lender to lender. But it’s a given that the higher your credit score, the higher your chances of getting approved. Plus, you can expect better loan terms.
Most lenders will also require a detailed business plan, along with documents that can give them insights on how your company is doing financially. If you’ve never applied for a loan before, you should consider hiring an accountant. He or she can help you prepare the necessary documents and ensure that your finances are in order.
Your Options for Equipment Financing
Business owners have a few options when trying to decide where to get loans for much-needed business equipment. They could go to traditional national lenders or specialized online lending companies.
If you opt for traditional lenders, you’re likely to get better rates and terms, but requirements are more stringent. With online lending companies, application and approval are much easier. There are even companies such as Your FundingTree that can help match you with trusted lenders just by filling out their 90-second application.
However, you should take your time to research online lenders, as not all of them might offer favorable terms. Other than traditional and online lenders, you might also want to look into a small business line of credit or a business credit card to purchase equipment.
Is Equipment Financing Right for Your Company?
Now that you know how business equipment loans work and what you need to prepare in order to apply for one, are you checking out different lenders?
If yes, good. Make sure to spend some time researching traditional and online lenders to find the best loans with the best rates and payment terms.
For more business tips, as well as personal finance advice, feel free to browse our other posts.