The Best Equipment Finance Options for 2020
Are you trying to decide whether you can afford new equipment for your business? Many owners get nervous when looking at a significant price tag, but buying the right equipment can boost profits significantly. Here are a few options for purchasing everything from semi-trailers to computer systems:
1. Conventional Equipment Loans
Traditional bank loans for equipment offer excellent interest rates and comfortable terms for large corporations and small businesses alike. Depending on your cash flow and credit rating, you can get sizable loan amounts. For example, construction companies can use this financing to buy excavators, bulldozers, steamrollers, and skid loaders.
2. SBA Loans
SBA financing can take longer to get approved for than other loan options, but the benefits are often well worth the wait. This government-backed loan provides incredible interest rates and long repayment terms for small business owners. You may not even need to make a down payment on the equipment.
3. Equipment Leasing
Leasing is a legitimate way for small businesses to obtain equipment and generate profits. Leases usually offer greater flexibility than loans, letting you upgrade high-tech systems more frequently. This type of financing generally has higher total interest rates but lower monthly payments that don’t tie up your working capital. Leasing can also provide tax benefits and other perks.
4. Short-Term Financing
Bridge loans and other types of short-term financing can be a great tool for purchasing or replacing essential equipment in a hurry. This type of loan has much shorter repayment terms — usually around six months — but it’s easier to get approved for and delivers capital in a few days instead of many weeks. This extra convenience comes with a higher interest rate, but it can be a real help for short-term needs. For example, you can use a bridge loan to buy essential equipment to run your business while waiting for approval on an SBA loan. Short-term financing can also give you a hand while you’re waiting for old equipment to sell.
5. Private Loans
P2P financing is when you ask a friend or family member to lend you money. This option is increasing in popularity with small businesses looking for microloans. One person may not have enough to purchase heavy machinery, but multiple investors may be willing to band together and finance your business growth.
New equipment can increase the amount of work you can accept, increase your productivity and total output, speed up the work process and improve the quality of finished jobs. With today’s equipment finance options, it’s easier than ever for you to get the equipment needed, no matter how long you’ve been in business. It’s worth checking all the equipment finance options available before making your choice.