Equipment financing is a loan or lease to purchase assets used to operate a business. Equipment financing is a way to obtain business financing for tangible assets. Equipment financing loans provide for periodic payments that include principal and interest over a fixed period of time. Some examples are ovens for restaurants, trucks, and/or manufacturing equipment.
Many equipment vendors work alongside lenders for financing, but it is also a good idea to establish a relationship with a lender that can handle many types of loans that can be there as a business grows and evolves. the majority of equipment finance lenders have ARPs ranging from 4% to 25% depending on your credit score. If you do not know what your business credit score is you can check here.
Lease or Buy Equipment
Which is best?
The Good
Many Small BUsiness owners like the fact that equipment financing typically comes with a lower APR than other loan options. In addition, the loan payments, as well as the lease payments, are tax-deductible. Carrying an equipment loan is also a great way to build up your business credit if you are a newer business or have had some credit challenges in the past. man small businesses also like the idea that if they lease the equipment instead of buying it, they will be able to consistently have the most up to date equipment and they can have this without paying the full cost to own the property.
The Bad
Equipment financing is not for everyone. The main benefit of equipment financing is lower interest rates, but in order to get those rates, you typically need a credit score above 680.
Depending on the type of equipment you
Depending on the type of equipment you need for your business if technology plays a major role in your industry you could purchase equipment and have it be outdated before the loan is even paid off. Depending on the type of equipment you need for your business
if technology plays a major role in your industry you could purchase equipment and have it be outdated before the loan is even paid off.