Your business needs the right equipment to run smoothly and maximise profits. That might be kitchen equipment, company vehicles, or special machinery – it all depends on what your business does and what you need to do it.
Replacing, upgrading or purchasing new equipment can be costly, especially if you need to pay upfront. With equipment financing, you can use existing equipment or the equipment you want to purchase as collateral to get what you need, without hurting your bottom line.
What is equipment financing?
From computers and coffee machines to cars, equipment financing is a type of business loan designed specifically for the purchase of business equipment.
You can purchase and start using the equipment right away and make payments toward what you borrow over time, using the equipment itself as collateral. The loan amount and terms are dictated by the price of the equipment. Once you’ve made all of your payments, the equipment is yours to keep.
How does equipment financing work?
The process of applying for equipment financing is fairly easy and is typically less difficult than a traditional loan:
- Determine your eligibility
The requirements vary between lenders, but as a guide you’ll need to have been operating for at least six months and be making around $5,000 in regular monthly sales to be eligible to apply.
Look at the cost of equipment you hope to use to determine how much you might require as a loan.
For some lenders this can be done online, and with little details required, is a quick process.
- Receive approval and your funds
The money can be funded on the same day of approval.
- Purchase the equipment you need
Now, you can make your upfront purchase and begin making regular repayments on the loan.