All businesses need business tools for the smooth running of the day-to-day operations. However, investing in new equipment strains cash flow, but equipment financing provides a flexible approach to maintain healthy cash flow.
There are various forms of equipment financing tailored to help businesses buy equipment. Ideally, the business borrows money to purchase equipment and pay it back over time, and then attain full ownership of the equipment.
There are different equipment financing options for business to choose from:
• Equipment loans
Designed to meet the needs of new businesses in need of equipment funding to expand their operations. To secure the loan, the equipment serves as the collateral, and the repayment period lasts between three to ten years.
• Term loans
Best for businesses with an established stream of revenue and in need of loan amounts amounting to one million dollars. It is a loan designed to help small business owners access funding for equipment purchases in the form of a mortgage arrangement. However, there are arrangements to secure term loans with or without collateral- depending on the amount to be borrowed.
• CDC/504 Loans for small business administration
A flexible option for businesses in need of immense loans amounting to millions for purchasing equipment.
• SMBs line of credit
An ideal option for businesses seeking quick and flexible equipment funding. It is the same as a personal equity form of credit in which the lender offers a specific amount of money based on the standing of your equity and credit score. The loan can be repaid within a few months or five years.
• Business Credit Card
Ideal for businesses interested in rewards for the purchases of equipment. While business credit cards offer low credit limits, they are worthwhile for the benefits of earning shopping points, cash-backs, and travel miles. However, they have high-interest rates and should be the last option for equipment financing.
To decide on an equipment financing option, you need to do thorough research on the available options and their terms. BizCap Commercial Finance can help you choose the ideal financing option for your business.