Equipment financing helps you finance up to 100% of the new or used equipment you need for your business. Applying for an equipment loan is generally a quick and simple way to finance the acquisition of most types of business equipment like, computers, machinery, vehicles, etc.
Asset-based lending (the technical term) is a type of small business equipment financing specifically designed for the purchase of equipment such as vehicles, machinery, and computers. Since the equipment itself acts as collateral, equipment financing can be easier to qualify for than an unsecured business loan. However, the amount you’ll qualify for and your interest rate will vary based on your business’s financial history and your credit score. Equipment financing can come in the form of loans as well as equipment leases.
Because the equipment itself serves as collateral, equipment financing is often faster and requires less paperwork than traditional business loans. They can be especially convenient when old equipment breaks and speed is of the essence. A commercial, or heavy equipment loan allows small business owners to spread the burden of costly equipment purchases over loan terms of several years, giving them the freedom to expand and invest in their business that they made not have had if they were obligated to pay the entire equipment cost up front.
You will have to prove your ability to pay back the loan with documentation such as bank statements and tax documents. Your credit score will also often be taken into consideration for a commercial equipment loan application, as well as a quote and other information about the equipment itself. Once approved, you and your lender will agree on a repayment schedule.
Even though approval and funding can be faster with equipment factoring, the best time to get a small business loan is before your business needs it. That way, you’ll be able to do your research, make a funding decision confidently, and get the best small business equipment financing rates available.
StreetShares provides the best options for getting the cash you need when you need it most through our collateral-free lending options.
Learn more about other simple collateral-backed funding solutions that enable small and medium-size companies to secure funding quickly and easily.
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