Equipment Loans

If you own or co-own a business, you know all about the need for equipment. If you own a barbershop, you need chairs and razors (and countless other things). If you own a restaurant, you need ovens and dining sets (and countless other things). Regardless of the business, equipment is required. If equipment cannot be purchased outright, the option exists to take out an equipment loan. Here’s an explanation of what they are and why they’re extremely beneficial for businesses (especially as opposed to equipment leases).

Benefit: The Equipment is the Collateral

Say you’re approved for a loan but the lender has doubts about your ability to repay the loan on time. In this case you will have to put up collateral. Anything you own with monetary value that the lender could sell can be used as collateral. This includes real estate, bank accounts, stock in the market, and business inventory & equipment.

The cost of the equipment purchased using an equipment loan can be used as collateral. This means you will not have to use anything previously owned as collateral for the loan. If the loan isn’t able to be paid back, the equipment owner simply reclaims the equipment. This significantly lowers the risk involved in dealing with collateral.

Can I upgrade or modify my equipment?

When you lease equipment, you do not own it in the end. By taking out an equipment loan, the business can retain the equipment upon repayment. Also, in today’s day and age of constant technological upgrade, modifications or upgrades to equipment often have to be made. With an equipment loan, the business can modify or upgrade at any point along the way. Also, if the equipment later becomes unnecessary, the option to sell it exists once it is owned.

Are business loans hard to get?

The approval rate for equipment loans is rather high, since the equipment acts as its own collateral. Also, equipment loans have a shorter approval process than most other loans, and interest rates can be as low as 8%. Equipment loans are generally paid off quicker than most other types of loan, and not to mention, most equipment loans do not require there to be a down payment made.

It’s really an investment.

There’s a reason why you need whatever piece of equipment you have your eye on. Chances are it is crucial to your business! If your productivity will increase as a result of having said equipment, definitely seek an equipment loan. It will increase your profit without affecting your operational capital, meaning more product and less labor. Plus, paying off equipment loans efficiently will increase your business credit score, only leading to more opportunity down the road.

Okay, what’s the downside?

There are only two honest drawbacks to getting an equipment loan, and one of them should be fairly obvious to you… The only thing money from an equipment loan can be spent on is equipment. For any and all other expenses, seek other methods of funding. The not-so-obvious drawback is that you may buy equipment you don’t end up needing. Be sure to do all necessary research and only buy the equipment your business simply cannot do without. Then why not increase your efficiency, your credit score, and your profit? Better technology means better business nowadays. Apply for an equipment loan today and stay with the times!

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