How Does Equipment Financing Work?

For several small entities, it is possible to finance as much as 100% of a piece of equipment’s value. Almost every lender will establish the loan term as the same as that asset’s useful life. For instance, almost every computer and software program, has an estimated lifespan of 3 to 5 years, as per actuarial site Asset Works.

Rates of Interest for the Equipment Loan

Like other loans, the product being bought, the condition of the entity you own, and your personal creditworthiness all will affect the rates of interest. These rates can range between 8% to 30%, so you must approach several sources and seek many quotes to make sure you are choosing the right loan.

The Pros & Cons To Consider When Getting Equipment Loans

Pros

• Quick turnaround time (TAT) to have the loan granted
• Straightforward application procedure
• Preserves free flow of cash
• The equipment concerned works as the loan collateral

Cons

• The loan term is likely to outlast the estimated lifespan of the asset
• There may be adverse tax repercussions through limited deductibility

More Information about the Pros of the Equipment Loan

Numerous companies that are part of the Fortune 500 list and several small entities seek equipment financing. It is a sign of how popular the loan is in the market. Here, we will discuss why it is very much in demand more closely.

Receive As Much As 100% Financing Without Any Down Payment

Different from almost every conventional loan type, you could arrange 100% financing for a new piece of equipment without having to make a down payment on it.

Maintain Highly Advanced Infrastructure

This form of loan tends to allow acquiring better and more pieces of equipment as compared to what you could buy with no financing. Some financing schemes cannot just make technology upgrades possible, but these can allow replacements during the financing term or lease term.

It Is Perhaps Possible To Cover Repairs

Having a new piece of equipment usually results in a new service agreement and warranty. The equipment unit can save your business thousands of dollars in expensive repairs as well.

Streamlined Operations

When performed properly over the right term, this form of financing could aid your business in running in a more efficient way, with less downtime owing to obsolete equipment.

Find the Financing You Require From Fundrly

Is your company having a hard time due to the limited flow of cash when you must put money into new or second-hand equipment? Or, do you have funds invested on valuable assets in a way that makes the money unavailable for other business purposes?

Make your business cash flow better. With the assistance of Fundrly, equipment financing becomes easily accessible, and you can make your business as competitive as possible in the industries mentioned below. This is to say, we offer the following services.

• Financing for construction equipment
• Office and computer equipment loan
• Landscaping equipment financing
• Industrial equipment funding
• Seasonal or recreational equipment financing
• Transportation financing
• Hospitality equipment financing
• Second-hand equipment financing

Small entity owners and entrepreneurs tend to commit the error of utilizing their funds to buy costly equipment. They may not recognize that a better way of getting the equipment they need without reducing important business capital exists. Equipment financing and leasing is a more affordable and easier option to finance equipment acquisitions. Any business requiring equipment can exploit the above-mentioned option.

With the asset as collateral, financial institutions lend money to owners of businesses at lower interest rates and with longer repayment terms, as compared to unsecured loans. The repayment term of a usual equipment loan can be anywhere between 7 and 10 years, which is greater than that of an unsecured credit line.

Equipment financing aids young business owners in claiming depreciation on the taxes they should pay too. An equipment loan comes as a fixed or floating interest rate credit line, and it requires no line rotation.

Loans for Start-ups

It is possible to supply loan amounts of $25,000 to $100,000 fast and with negligible paperwork. After applying for it, the creditworthiness of your start-up may be assessed more heavily as compared to your own credit score. As the applicant, you will have to submit 2 years of your own tax returns, your financial plan, and the paperwork with estimates of how much that equipment will cost. Fundrly case managers can guide you through the whole process, one step at a time.

Loans for Well-Established Businesses

Fundrly works with a group of lenders whose institutions specialize in offering financial aid to those businesses that have been in operation for 13 months. For a loan of up to $100,000, the application procedure is uncomplicated, and the processing period is between 3 to 4 days. For a loan request above $100,000, the tax returns and credit score of a business will suffice to get financing at a rate that ranges between 5.99 and 7.5%, with a 5-year term.