What Kind of Equipment Can I Finance and How Can I Do It?

One of the most important decisions you will need to make as a business owner is how you will acquire the equipment you need to run your business. This is especially true for traditional businesses in the transportation, industrial and construction fields. The larger problem at hand is how you will afford to buy all the equipment you need to run or expand your business when the cost of such equipment is extremely high. The answer lies with equipment financing, but before we go into that, let’s review what type of equipment you might need to finance by industry. I’ve highlighted a few in the lists below.

Civil Equipment

  • Concrete projects
  • Earthmoving projects
  • Quarries
  • Roads
  • Trench building
  • Cranes

Manufacturing Equipment

  • Printing equipment
  • Engineering equipment
  • Plastic molding machines
  • Sheet metal machines
  • Wood working machines

Healthcare Equipment

  • Dental
  • Medical
  • Veterinarian

Transportation Equipment

  • Buses
  • Trucks
  • Coaches
  • Helicopters
  • Airplanes

How to Finance Equipment

Equipment finance is similar to many other types of financing that you would take on for several other types of everyday needs such as houses, cars and retail items. In addition, equipment finance companies can provide you with a lease instead of a loan on your equipment. These companies offer fixed and adjustable rate loans but some may require a minimum loan size of $250,000 so make sure to check with your lender on their minimum loan size requirements. You can find several options by looking around on the internet and seeing what the different lenders are offering.

What are the Standard Terms?

Rates for equipment financing as of 2014 can vary from 5 – 8% and so can the terms and the payment plans. As interest rates fluctuate from the time of this writing, the loan interest rates will also surely change to reflect current market conditions. Make sure to ask your lender what their current rates are. Monthly, quarterly, seasonal and deferred payment options may also be available depending on the vendor you’re working with. Terms are generally flexible from 30 day to 72 month payback periods and it is possible to get approved and funded within one day. The equipment that you take the loan out on will also be used as collateral against the loan that you take out on it and will remain tied to the loan until it’s paid off in full.

Conclusion

If you plan on starting a business in an industry that requires a lot of expensive equipment to operate, then chances are that you will need to find a way to finance your equipment purchases. By doing some research on lenders that meet your needs and asking them about their current rates and payback terms, you can set your business up for success. As your business grows, you will even be able to establish long term relationships with a few lenders so that you can get even better terms and faster funding as you get to know each other.

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