Equipment Financing for Small Businesses

Equipment is a costly but necessary expense for businesses.

Having the right tools for the job is vital, and this is true even for the smallest startup. Unfortunately, growing organizations may not have the funds for financing readily available.

Quality equipment-financing plans can help smaller companies get the assets they need to start their operation off properly. Whether a person wants to buy the equipment or lease it, there are many options available. Every lending institution has its own terms, but financing for equipment is available for almost anyone with decent credit and a proper business plan.

The Importance of Equipment Financing

Equipment is something that every business needs. Whether it’s the bulldozers on a construction site, the stoves in a restaurant, or the severs at an IT company, equipment is a costly but necessary expense. While equipment can be expensive, it is the type of expense which is required to help an organization generate the type of revenue managers hope for.

For growing companies, this initial hurdle can be very hard to overcome. Equipment for commercial operations can be extremely expensive, especially for a startup that doesn’t have many resources to speak of. A smaller company may consider various loan options to get the equipment they need, but certain options are better than others for financing this need.

Why Things are Different for Small Businesses

For small businesses, it can sometimes be a bit harder to get a loan. Without a long and detailed history of financial responsibility or a good amount of collateral to put up, loans are tougher to come by. This doesn’t mean that it is impossible to get a loan for equipment. In fact, certain options are designed specifically for this purpose.

The SBA’s 504 loan option can be used for long-term machinery and equipment. In this type of arrangement, a person is able to get a loan based on the amount of funding they need and their ability to repay. For smaller businesses with uncertainties in terms of their future revenue streams, flexible options like this are much easier to manage.

Is the Leasing Option Worth Considering?

Equipment leasing is an option that many businesses choose if they’re looking to get machinery quickly and save time.

Benefits of Leasing Equipment

  • Quicker than getting financing for purchases
  • Makes it easier to keep up with new technological developments
  • Short-term options allow time for evaluations
  • Potential tax write-offs
  • Maintenance costs are sometimes included

Whether a person is looking to buy or lease equipment, financing options are available.