When running a home business, you have fewer costs than with a regular company, but you will still have equipment to pay for, which can be a significant expense. You must have the latest and best equipment available for your home business as this will allow you to streamline the operation, provide a high-quality product/service, and compete with the big brands in your industry. So, how can you finance equipment for your home business? There are several options to consider which should allow you to raise the amount that you need to get the best equipment for your business:
Personal Savings/Family Loans
One option is to use your own savings or to borrow the money from friends/family. This can be a good option, but you must be wary that it will always be a risk to use your own money and borrowing from loved ones can be difficult. Change relationships if you are not careful — therefore you should always draw up a contract and make sure that both parties are happy with the arrangement.
Line of Credit
A line of credit (LoC) can be a smart way to finance the purchase of business equipment and other various costs as it simply involves having a preset borrowing limit, which can be used by the business at any time. This is different from a typical loan in that you usually must pay interest on the borrowed balance as opposed to paying in fixed installments. You can learn more about LoC at Investopedia.
Short Term Loan
Following this, short term loans are another popular way to finance the purchase of new business equipment and always an option worth considering. Online brokers can find the best lenders with flexible options, so you should be able to find a loan that suits your needs, allows you quick access to the funds you need, and could even help you to get approved if you have a low credit rating.
Business Credit Card
Having a business credit card to hand is always worthwhile and could be an excellent way to finance the purchase of new equipment for your home business. You are likely to have lower limits to other forms of credit available to you. However, you should still be able to purchase some business equipment and benefit from handy features like points, travel miles, and cash back for your business. Interest rates and fees can be high, though, which is why you should always make sure that you can afford to pay the purchase off in a short time frame if you use this method.
Leasing
It is also worthwhile considering leasing the equipment as opposed to purchasing, especially if it is equipment that will become dated in a few years. This allows you to easily upgrade at the end of the agreement, but you might find that it is more expensive than using a loan to purchase the equipment.
As you can see, there are several good options available when it comes to financing the purchase of equipment for your home business. Ultimately, it will come down to your situation and preference, but at least one of the above should be a suitable solution.
