How to Get Funding for Purchases or Leases
When your vital machinery breaks down, becomes outdated, or your growing business needs additional tools, costs can quickly soar.
Equipment financing allows you to obtain the essential machinery and technology you need without depleting your cash flow.
At iBusinessLender, we connect you with a network of lending partners who provide various funding solutions for purchasing or leasing equipment. This ensures that your business can maintain its progress and continue to thrive.
SECTION 1
Understanding Equipment Financing
Business equipment financing involves obtaining funds to purchase the essential equipment, tools, technology, or machinery needed for your operations. Typically, in traditional equipment financing, the item you plan to acquire serves as collateral for the loan. If you default on payments, the lender has the right to repossess the equipment to recover their losses.
According to the Equipment Leasing & Finance Foundation, 79% of companies in the U.S. use financing options such as loans, leases, and lines of credit to acquire equipment.
How Does Equipment Financing Work?
A business equipment loan enables you to finance the purchase of various resources crucial for your company’s operations. This can include machinery, office furniture, vehicles such as tractors and construction equipment, and technology like computers.
With business equipment financing, you might be eligible to receive up to 100% of the equipment’s value in some cases. However, for high-risk investments due to high depreciation rates, lenders may require a down payment of 10% to 20%.
The amount of funding you can secure depends on your business’s ability to repay the loan, as well as the cost and condition of the equipment you want to purchase. In many equipment financing arrangements, the equipment itself acts as collateral, allowing you to obtain loans or leases even if your credit is not perfect. However, expect higher interest rates in such scenarios.
SECTION 2
When Is Equipment Financing the Right Choice?
According to the Federal Reserve Banks’ State of Small Business Credit Survey, equipment and auto loans are among the top five most sought-after loan types for small businesses, with fourteen percent of respondents indicating their preference for these loans. So, why should you consider equipment financing?
Only Need Equipment
Traditional equipment financing is ideal for those who solely need funds to purchase equipment. If you require capital for other business expenses, purchases, or investments, you will need a different type of loan to cover those additional costs.
Need Funds Quickly
Unlike conventional business loans, which can take weeks to process, equipment financing loans can provide funding much faster. Once approved, you might receive the necessary funds within just 2 days, allowing you to quickly acquire the equipment you need to keep your business running smoothly.
Lack of Additional Collateral
One of the benefits of a traditional equipment loan is that the equipment you purchase serves as collateral for the loan. This means you don’t need to provide additional collateral, such as real estate or other assets. In some cases, you might not even need to make a down payment, making it easier to secure the financing you need without tying up other valuable resources.
SECTION 3
What Does Equipment Financing Cost?
At iBusinessLender, our network of lending partners offers equipment loan rates starting at 8%, with flexible terms ranging from 1 to 5 years.
The length of your financing agreement is largely determined by the expected lifespan of the equipment you are purchasing. For instance, financing for a truck or construction equipment usually comes with a longer term, reflecting their extended usability, whereas computer equipment may have shorter terms due to its quicker obsolescence.
Repayment schedules can be customized to suit your needs, with options for daily, weekly, or monthly payments, depending on the specifics of your agreement.
Equipment Financing Example
Consider you have been approved for a $20,000 loan at an interest rate of 10%, with a term of 3 years (36 months). Using our equipment loan calculator, you would find that your estimated monthly payment would be around $645. Over the course of the loan, you would end up paying approximately $3,220 in interest.
Keep in mind that some lenders may charge a one-time upfront fee. The amount of this fee can vary depending on factors such as the loan term, interest rate, and total loan amount.
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How to Qualify for Equipment Financing
Qualifying for equipment financing doesn’t have to be complicated. At iBusinessLender, we prioritize your time and business, making the process as seamless as possible.
What Our Lenders Evaluate
Our lending partners will review your business’s cash flow, considering factors like income, expenses, existing debt obligations, and credit score to determine your borrowing capacity.
Additionally, it’s helpful to provide details about the equipment you intend to finance, including:
- Condition: Whether the equipment is new or used
- Usage Metrics: Such as mileage or operating hours
- Seller Information: Whether you are purchasing from a private seller or a vendor
iBusinessLender Minimum Qualifications
To qualify for a business equipment loan through our lending partners, you should meet the following criteria:
- Have been in business for at least 2 years
- Generate an annual revenue of $160,000 or more
- Possess a credit score of 620 or higher
If you don’t meet these requirements or need a business equipment loan despite having bad credit, we can still help. Our lending partners offer alternative financing options, such as short-term loans and merchant cash advances, which are available to eligible applicants with credit scores in the 500s.
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Equipment Financing Through iBusinessLender
What Sets Us Apart
Numerous small businesses have trusted us with their financing needs and it shows in our ratings.
How to Apply for Equipment Financing
If you’re looking for a straightforward and efficient way to secure equipment financing, iBusinessLender is here to help. We streamline the application process by bringing together top funding providers in one place. Applying through our lending partners is quick and easy, and you can obtain preapproval without impacting your credit score.
Whether you need a loan for heavy equipment, construction equipment, or any other type of financing, the process involves just three simple steps:
- Provide Information: Share details about yourself and your business.
- Submit Documentation: Submit recent bank statements to support your application.
- Receive Offers: Receive multiple financing offers from our network of lenders.
Choose the offer that best meets your needs, and you could secure the equipment funding you require within 2 days.
SECTION 6
Equipment Financing: Frequently Asked Questions
Equipment loans are ideal for acquiring or leasing both new and used equipment, especially high-ticket items. Financing in this specialized industry can encompass a variety of needs, including:
- Vehicle loans
- Construction equipment financing
- Restaurant equipment loans
- Medical equipment loans
- Heavy equipment financing
- Farm equipment loans
- Manufacturing equipment financing
These loans provide the necessary funds to help businesses in different sectors obtain the essential tools and machinery they need to operate efficiently and grow.
Equipment loans have a unique structure compared to other small business financing options. Unlike other forms of financing, such as business term loans, lines of credit, or alternative funding solutions, traditional equipment loan funds are allocated for a specific purpose. They are strictly used for the purchase of designated pieces or batches of equipment. This focused approach ensures that the funds are utilized directly for acquiring the necessary equipment, providing a clear distinction from more flexible financing options that can be used for a variety of business needs.
One of the limitations of traditional equipment financing is that the loan funds must be used exclusively for purchasing or leasing business equipment, tools, and machinery. Additionally, some lenders might require a down payment as part of the financing agreement.
When deciding whether to purchase or lease your business equipment, consider the following factors:
- Duration of Equipment Need: How long you will need the equipment
- Financial Standing of Your Business: Your current financial health and budget
- Likelihood of Equipment Obsolescence: How quickly the equipment may become outdated
- Maintenance Capabilities: Your ability to maintain the equipment on your own
Purchasing Equipment: Business equipment loans are best suited for acquiring items you intend to own permanently, such as durable machinery like cash registers, refrigerators, or commercial manufacturing tools. These are typically used for three years or longer.
Leasing Equipment: Leasing is a better option if the equipment is likely to become obsolete quickly, if you cannot afford a down payment, or if you need the equipment for a short-term period or a specific project.
