All businesses, big and small, need financing. The kind of financing needs you have depends on your situation. The one area that businesses spend the most money on, however, is equipment. In order to keep your business running, you need to have the best equipment to get the job done. As a small business, how do you make sure you can afford the right equipment? The best solution is usually to turn to equipment financing for your equipment needs.
The Basics of Equipment Funding
Equipment funding is when you borrow from a financial institution to cover expenses for equipment. There are a lot of different sources when it comes to finding a financing plan. You can choose from traditional bank options, online lenders or lease from an equipment company. With all of the different options, it’s not difficult to find something that works for you. When setting up financing terms, make sure that you choose a plan that covers the time that you’ll need the equipment for. You never want to have to pay for equipment that you are no longer using.
Options for Equipment Funding
There are two types of equipment financing products that lenders offer small businesses. The first is equipment loans and the second is equipment leases. Neither is better than the other is and both can be good for different small businesses. In order to make the decision that’s right for your company, it’s best if you understand each.
An equipment lease is similar to a rental agreement. The equipment company keeps the title of the equipment while you pay them a monthly fee. In some instances, an equipment company will have a third party that you make your payments too. At the end of the lease, you can opt to buy the equipment or return it.
In an equipment loan, you receive a lump sum of money to purchase your equipment. The financing company pays for the full cost of the equipment and your small business keeps the title. Then, you make payments to the lender until you pay the loan off.
All businesses need adequate equipment to stay running. If you’re a small business owner but you can’t afford new equipment, there are options available. Between loans and leasing, there are a lot of ways to receive financing. When it comes to equipment financing, it’s all about choosing the type of financing that best suits your company.