Starting a new business means investing a lot of capital upfront to cover equipment costs. Equipment financing helps cover up to 100% of these costs quickly and easily. This type of financing has its ups and downs, so be sure to know what you are getting yourself into before taking this route.
Qualifying For Equipment Financing
The good news about equipment financing is that most businesses will qualify for loans. Be aware, though, that the amount and the interest rate you are eligible for depends on your equipment’s value and your credit history. Equipment financing is ideal for businesses with less than stellar credit because the equipment will act as collateral should you default on payments. The higher the value your equipment, the more you might qualify for.
Length of Financing
When it comes to loans, you have to consider how long you want to finance your payments. With equipment financing, the length of the contract generally depends on the equipment you are buying. Be aware that equipment has a life expectancy. You do not want to get stuck paying for equipment that has become outdated or aged past its functionality. The whole point is that you are paying for useable equipment. Most lenders will not finance past ten-years, though, so if you are purchasing quality equipment, you should be able to pay off your loan before passing the equipment’s life.
Financing vs. Leasing
Another popular option for entrepreneurs looking to start a business is to lease equipment. The main difference between leasing and financing is that, with an equipment loan, you will eventually own the equipment outright. By leasing, you will never own your equipment. If you intend to stay in business long term, it would be better to take out a loan so that eventually, you no longer have to pay for equipment.
For help getting your new business off the ground, check out Prosper Lending Firm. We’ll help you with equipment financing so you can soar!