Tips To Get the Equipment Financing Your Business Needs

Equipment financing doesn’t need to be a dream that’s out of reach. In fact, by taking some simple steps, you can get high-quality equipment without much trouble. The key is to plan properly. Follow these tips when choosing the right funding and getting equipment that fits your company’s needs.

Choose Equipment That Maintains Its Value Well

First, view equipment financing as a long-term investment. Don’t use a loan to purchase things that are only relevant for a short time, such as computers or electronic gadgets. Otherwise, your equipment loses its usefulness while you’re still paying for it.

On the other hand, construction equipment, cleaning equipment, plumbing tools, transportation equipment, heavy machinery, and similar items are built to last. With care, these pieces can keep going strong decades later. They remain relevant because they help your company get the job done correctly.

Give Your Business Valuable Equity

There are several benefits to doing things this way. For one thing, the money you pay for the equipment loan doesn’t disappear. It becomes equity. In other words, assets have value. If a piece of equipment is worth $20,000 and you’ve paid off half of the loan, you have $10,000 in equity.

How can you use equity? Many lenders accept it as collateral for other loans. For example, if you want to purchase real estate down the road, and a lender asks for a guarantee of repayment, you can use your equipment to get approved for the loan.

Invest in Future Revenue

Another benefit of equipment financing is that you’re investing directly in something that generates profits. Unlike overhead costs that you’ll never see again, equipment is something tangible. You can use it to keep working, expand your team and provide valuable services.

Your revenue only gets better as time goes on and you pay off more and more of the loan. Once you finish paying off construction equipment, for example, every job you take on afterward with that equipment is almost pure profit.

Get the Best Loan Terms Possible

This is one area where it pays to put down a large down payment if possible. Some equipment loans offer 0% down, which can help if you have tight cash flow, but you should try to make a 10% or 20% payment if possible. That way, you can get lower interest rates that end up saving you a significant amount of money over the life of the loan.

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