Many businesses’ revenue streams rely on certain pieces of equipment. Depending on your industry, buying brand new equipment outright can be quite an expensive investment, and repairs or upgrades on the equipment you own can put a significant financial strain on your business’s cash flow. Equipment financing is often your best bet at affording equipment and maintenance. It’s also beneficial for companies that don’t have substantial working capital to help grow their business.
Financing for Various Industries
Financing equipment can be useful across many industries, but there are some that are best suited for the benefits. The restaurant industry is a popular one since equipment needs to be constantly working at a high level for a restaurant to run smoothly. Cooks require ovens, stovetops, refrigerators, and the like to be functioning reliably, which can make starting up a restaurant a pricey endeavor. The healthcare industry is another large-scale industry that relies heavily on equipment. As scientific developments are made, hospitals and health care practitioners require the latest in diagnostics and treatment technology in order to provide their crucial services. Big agriculture is a large industry that is supported by farming machinery such as tractors, combines, and more. Construction is another major industry that deals with housing and infrastructure and requires various heavy machinery to excavate, maintain roads, and construct buildings. In order for any business in these industries to flourish, they’ll need the right equipment for the job. This means they may need to seek financing options in order to procure the necessary equipment.
How It Works
Financing equipment refers to acquiring a loan for business-related equipment. These loans function similarly to most other loans, where a lender will purchase the equipment for you and you will pay off your lender incrementally, including interest. At the end of your term, you will officially own the equipment. However, equipment loans almost always require the equipment to be listed as collateral. This means that if you fail to pay your loan, your equipment could be repossessed.
Qualifying for an Equipment Loan
Requirements differ from lender to lender, but in general, any lender will look at:
- Your business plan
- Your credit score
- Your business’s current financial situation
Each is an integral piece of your application. A lender will want to ensure that you’d be a reliable borrower, and they’ll want to see exactly how you plan on using the funds to boost your business. Look into equipment financing to secure that piece of equipment for your business as soon as possible.