In order to have a successful small business, you will need some proper equipment, for sure. But many people encounter difficulties when it comes to equipment financing, and they do not know what the best solution is for them.
It is good to know that there are plenty of equipment financing options, and you don’t necessarily have to put money down, as you may initially think.
Select the best equipment finance option for your business
First and foremost, you have to know the available equipment finance options at the moment, so that you can choose the right one for your business.
- Equipment loan
Usually, you can get a loan for the full cost of the goods, and this may be an excellent opportunity for you especially if you don’t have all that money, or you need to invest it in other things. The main advantage of this option is that it will allow you to use your available cash to generate income, which is a great thing for a small business.
There are also plenty of repayment options, and you can also add some equity, for example through a deposit, in order to reduce the loan and the related costs.
- Finance lease
Another option is to lease the equipment and benefit from it even without a capital outlay, and offer to own it later. Most of the banks offer you certain flexibility when it comes to payment terms, and you can choose how to schedule them. Moreover, your payments will be tailored according to your financial possibilities, as you can opt for diverse lease terms.
- Use a hire purchase agreement
This agreement is made between you and the bank, and it usually does not require additional security. This solution practically means that the bank buys the equipment you want and then hires it to your business for a determined period that you agree upon. A hire purchase agreement allows you to use the available cash for generating income, just like an equipment loan.
- IT rental
In recent years, IT rental has known a significant development around the world, especially because IT equipment is expensive, but it dates quickly. For this reason, people who own a small business opt for leasing the IT equipment. This way, their business will stay up-to-date without spending a lot of money. Furthermore, if you are pleased with it, you can offer to buy it.
Increase your approval chances
If you want to increase your approval chances, you have to be an attractive borrower. This means that the credit provider can trust you. How can you prove to be a good risk? An aspect that will count a lot in this situation is a stable history, without periods of inactivity for your business. Another one is, indeed, your business income and your bank account. If your credit record shows that you are saving, your credit rating will definitely be improved.
Search for the best deal
We are living in a free society; where you have plenty of possibilities when it comes to equipment financing, so don’t be afraid to shop for the best deal. Put the right questions, negotiate, and then make a choice.
