Many companies are eventually faced with the need to make major equipment purchases, in order to stay competitive with business rivals, and to experience desired growth of operations. This article will discuss some of the options for financing that equipment purchase, including the possibility of leasing it rather than buying it outright.
Leasing The Equipment
Instead of actually buying the equipment, you can set up a leasing agreement with the owner of the equipment, just as if you were renting building space. This could be advantageous for your company if you expect that the equipment life will be of relatively short duration, or that it will be necessary to regularly upgrade to the most modern equipment.
When you set up an equipment loan with a financial institution, you can sometimes get 100% financing, although down payments are required by some lenders. In this kind of arrangement, the equipment itself serves as collateral, so you don’t usually have to offer up any other assets as surety for the loan. It is generally possible to obtain an equipment loan in less than a week, and financing can often be obtained through the numerous online lenders who offer such services. The likelihood of approval doesn’t depend so much on having a great credit history, but it’s usually necessary to have been in business for at least a year.
SBA CDC/504 Loans
One of the types of loans offered by the Small Business Administration covers the purchases of equipment, and is known as the CDC/504 loan. In order to qualify for this type of loan, your business must have a net worth below $15 million and revenues of less than $5 million for the two years prior to your loan application. As much as $5.5 million in loans can be obtained for equipment purchases, and the terms of such loans can be for as long as 20 years.
Business Line of Credit
If your business has a good track record and an excellent credit score, you may be eligible to receive a business line of credit from a lender. In some cases, as much as $1 million can be obtained as an upper limit. The big advantage of having a business line of credit is that, in addition to making your equipment purchase, you have the flexibility to use available funds for any other kind of business expense that comes up.
Equipment Financing with BizCap Commercial Finance
Sometimes a major piece of equipment is all your business really needs to get to that next level. Contact us at BizCap Commercial Finance, so we can discuss options which might help you obtain the equipment your company needs to grow and remain competitive in the marketplace.