When it comes to starting up a new business, few items are more expensive than paying for new equipment. Unfortunately, equipment is sometimes not covered in standard bank loans. As a result, you may have to find creative ways and alternative forms of financing in order to pay for your equipment. That being said, these financing programs are out there – you just have to find them. As such, here are 3 ways to pay for your business equipment.
Equipment Finance Loans
In many cases, banks or other financial institutions may have business equipment financing available to you. According to Lantern Credit, “An equipment loan is a type of small business loan for the specific purchase of necessary business equipment. They are business loans that are generally paid off within a few years.”
In other words: These loans are often available, but they are short-term. As such, you’ll have to make sure you have the revenue and credit to obtain these loans and potentially roll them in with an overall financing package. You may also have to place some sort of guarantee, lien, or collateral on the loan.
Thankfully, these loans aren’t as complicated or cumbersome to obtain as regular loans. There is usually less paperwork than with other types of loans, and there are often tax deductions associated with these loans.
Lease to Own
Many vendors will offer lease to own programs for business equipment. Here is how this works: You essentially rent the equipment in question. You’ll pay regular monthly payments – usually cheaper payments than you would if you were financing the equipment directly. However, you’ll never be making any progress towards actually owning the equipment, which will still be owned by whoever you are leasing it from. At the end of the lease period, you will usually be given a few options, including purchasing the equipment outright, returning it, or upgrading it for another model.
This type of financing comes with additional flexibility that you may not be able to find elsewhere. However, depending on the lease, you may never be building any equity towards owning the product. As such, it may not be worth it.
In many cases, merchants will offer direct financing that allows you to purchase equipment from them. This often comes with many benefits, including the ability to purchase and finance equipment easily, thus saving you hours of time and money. However, merchant financing may not have the types of competitive rates or flexible repayment plans that you can get from a bank or financial institution. As such, you’ll have to do your due diligence in order to determine if this type of financing is appropriate for you and your business.
Business equipment purchases are vitally important parts of your future business’ financial success. Make sure to do extensive research and find a business equipment financing program that meets all of your needs while giving you the lowest rates possible.