At some point in your business’s life cycle, you may need to invest in pricey equipment to ensure that it’s competitive. Yet, few small businesses have the cash flow to pay for such big-ticket needs out of pocket. Equipment financing is designed to make those large but necessary purchases more financially feasible for small businesses.
Here’s what you need to know:
What Is Equipment Financing?
In its most general sense, equipment financing is a type of specialty financing that empowers small businesses to fund up to 100 percent of the cost of equipment they need (which can range from machinery to technology to vehicles) without requiring that they lose access to cash flow in the process. How much you can finance depends on a variety of factors, including your sales volume and the cost (or value) of the equipment you’ll purchase.
Potential Advantages of Leasing Equipment vs. Equipment Financing
You may often hear of the potential advantages of leasing equipment for your business when it comes to preserving cash flow, but equipment financing allows the best of both worlds: You maintain liquidity and invest in an asset you’ll one day own.
While there can be some advantages of leasing equipment for your business if you’re experimenting with a new product line or are unsure of your future strategy, remember that you won’t own the item once the agreement ends.
If you intend to use the equipment you’ll finance to support your business for years to come, equipment financing allows you to gradually make small payments toward collateral that ultimately builds your company’s value.
Benefits of Equipment Financings
Here’s a look at the some of the specific benefits of equipment financings:
- Invest in your potential. Though the benefits of equipment financing are specific to business owners, the general concept is not unlike financing you may have secured in your personal life to purchase a car or a home. While you may not have had the cash on hand to pay for the item in full, the asset you’re financing has value that is worth purchasing — even if that means making payments to own it, little by little. Lendr equipment financing empowers you to leverage your business’s sales volume to purchase the equipment that will help your business realize its potential.
- Flexible terms. Equipment financing amounts, rates and terms vary by provider, but Lendr is committed to supporting the needs of all small businesses — including startups that have been in business at least 12 months and small shops. Our loan terms may be as short as four months, and rates as low as 1.25 percent. Repayment occurs daily (or in some cases, weekly) in small amounts, based on settled credit and debit card sales.
- Financial support for all phases of your business. Not only might your sales cycle fluctuate monthly or seasonally, you may have monthly financial obligations that require liquidity — regardless of your sales performance. Lendr equipment financing allows you to purchase the equipment you need to thrive, without sacrificing cash flow or financial stability. Repayment is based on your sales volume, not a fixed monthly amount.