Most times in a small scale or large business timelines, it is absolutely important to upgrade or improve upon by replacing most worn out equipment. This is where equipment loans are a sort of lifeline to any business owner. They can mean the difference between success or failure when it comes to running a small business. But you may wonder what the benefits of equipment loans are and how to get equipment loans? What are the criteria that lenders look for before deciding to approve equipment loans.
WHAT IS EQUIPMENT LOANS?
This are simply loans obtain from financial institutions to purchase equipment. Businesses will often have the need to purchase, replace, repair, or upgrade various kinds of equipment to process, manufacture, or produce their product. Equipment can include such things as medical and dental medical machinery; restaurant ovens, cookware, tables and chairs, linens, and catering supplies; phone systems; computer monitors, printers, copiers; furniture, tools, vehicles (for commercial use), specialized machinery, industrial equipment, and more. All of this equipment is essential for your business to run at maximum efficiency and maximum productivity. But what do you do when your equipment is old, worn, and needs to be replaced? Often you have the choice to either purchase new equipment outright or lease.
Loans or Leases
When considering business equipment loans, know that you can also look into leasing the equipment. Here are some things to consider about leasing versus getting an equipment loan. Kindly consider REAL BRIDGING FINANCE LIMITED for your equipment loans.
Leasing typically does not require a down payment. This is especially beneficial for those businesses with little to no available capital. If a down payment is required, it is typically relatively small compared to what a traditional loan down payment would look like.
With a lease, you can finance around 100% of the cost of the item or items plus around 20 – 25% of the so-called “soft costs.” Soft costs include any taxes or delivery charges.
Leasing gives your small or online business a greater amount of flexibility. You can return the item at the end of the lease or you have the option to purchase it for a small amount once the principal of the loan has been paid in full.
Each lender will have different terms, but in general, with a loan, you can finance around 80% of the total purchase price of the item. When choosing to buy your equipment and finance through a loan, you own the item from day one. A down payment of around 20% is generally required for most small business equipment loans. The collateral for the loan is the item or items you purchase with the equipment loan.
Reasons to Get a Business Equipment Loan
· To replace old equipment
· To update older or out of date equipment
· Add to your existing equipment inventory
How to Get Business Equipment Loans
Excellent credit is required for most equipment loans. After all, it’s an investment in your business and in your business’ growth and revenues. You may want to consider applying for a loan at the bank with whom you currently do most of your business. Or you may want to consider a nontraditional lender such as REAL BRIDGING FINANCE LIMITED an online lender which offers assistance for small and online business owners in need of fast access to capital to grow their business. Business loans offered through us sometimes referred to as FLIOMLTD is an option. A business loan gives businesses upfront cash in exchange for a percentage or a portion of future credit card sales.
If you have had strong sales, but struggle with little or bad credit, a business loan may be a particularly good option for your small or online business. Getting the capital you need when you need it can mean the difference between the success or failure of your business.
Note: You typically will not qualify for a line of credit for an equipment loan if you have a prior bankruptcy on file, if your business has been in existence for less than one year or if you do not already have the ability to process credit card payments for your customers. Make sure all of these things are in place before you apply to a traditional lender or to a nontraditional lender such as FLIOMLTD.
Traditional lenders, such as banks, are often reluctant to extend traditional equipment loans to small or online businesses with poor or bad credit. Such businesses will be deemed “too risky” and will have great difficulty in securing a traditional bank loan for their business needs. This can be a problem for many small or online business owners who need the capital to purchase, replace or repair outdated or broken equipment. This is where a business loan can come in handy. A business loan gets you the money you need at a fast turnaround time so you can continue to run the day to day operations of your business.
Benefits of Equipment Loans
Quick Approval –Generally, equipment loans are approved (or denied) rather quickly. One way to speed up the process is to consider applying with a nontraditional lender such as FLIOMLTD for your small business line of credit. FLIOMLTD is international loans lender that offers quick funds for multiple purposes including inventory, equipment upgrades and marketing efforts. FLIOMLTD also considers your request within a matter of minutes. That means you can have the additional capital you need faster, so you can purchase or replace the equipment you need.
More Money In Your Pocket – Keep cash-on-hand for other purchases you may need to run your business. Imagine one of your delivery trucks breaks down and needs to be replaced. Or the oven in your restaurant is on the fritz. Rather than spending money from your business revenues to pay for these very high-ticket items, equipment loans can be used to replace or repair this very expensive – and vital – a piece of equipment.
Flexible Payment Schedule –Depending on the lender from whom you secure your business equipment loans, you may be able to take advantage of flexible payment options. This comes in handy as you’re working to replace the equipment, continue running your business and also making payments on your business equipment loans. Some lenders may offer you the option of choosing monthly, seasonal, quarterly, biannual or even annual payments depending on the type of loan you secure. Note: you may also be able to take advantage of a 90-day deferment on repayment of your equipment loan. Again, work with your lender on your equipment loans to find out what works best for your business needs.
Approximately 25% of “Soft Costs” Covered –Soft costs include things such as fees, delivery charges and freight charges. Again, each lender is different, so be sure to do your research to know exactly what charges are applicable to the loan and which charges you will be responsible for covering.
The Steps to Getting an Equipment Loan
As your business grows, you will need to replenish your inventory, provide daily, monthly, and annual maintenance on key equipment, and ensure timely delivery of your product or services. Equipment loans are a vital resource to the small or online business owner.
Have a solid business plan.
Lenders – Traditional bank lenders and some nontraditional lenders – will look to your business plan as a roadmap of your future success. Identify your business. Describe your product or service. Detail your current cash flow system and project an aggressive, yet a realistic set of goals for your future business growth. Identify your target market, the socio and economic demographics of your primary market and then explain in detail how your product or service will fulfill a need within this market. Finally, summarize your entire business plan in a few paragraphs at the very beginning of your plan and call it the “Executive Summary.” This will give lenders a good synopsis of what your business is all about. A good business plan does not have to be pages and pages in length. However, it should be thorough and well thought out. There are many templates and examples of business plans online. Find one that works for you and implement it as part of your strategy to secure your equipment loans.
Make sure you have an updated personal resume.
Even though you’re not applying for a job, a personal resume is a great resource to have when applying for equipment loans. Lenders of all kinds – traditional bank-based as well as nontraditional lenders – look to a personal resume for character traits that will support the small or online business plan. They want to see the person behind the business. And, since you will be responsible for repayment of the loan, lenders will want to make sure you’re a good credit risk for any equipment loans issued.
Have cash flow statements at the ready.
Being able to show your money coming in and your money going out in current terms is a critical factor that most lenders require before issuing any kind of equipment loan. Get your finances in order. Hire a certified public accountant to go through your financial records. You’ll need to make sure you have both your personal and business financial statements in order and bulletproof – meaning the level of integrity in your reporting is accurate and ethical. It is one of the best indicators as to how your business is doing in the real world and it’s one of the main things lenders consider when reviewing small business loan requirements.
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