Equipment Financing and Leasing
What is Equipment Financing?
Equipment financing is the process of obtaining a loan from a lender to purchase business equipment. We all know how important it is for a business to have the right equipment for proper operations. Some equipment is very costly, especially sophisticated machinery, so a business owner might need other funding sources to cover their equipment purchases. Obtaining an equipment financing loan could be the best option for businesses seeking funds to purchase equipment.
What is Equipment Leasing?
Equipment leasing is quite similar to borrowing equipment, however, in leasing, the lender would be the one to purchase the equipment and then rent it to you with an agreement to pay a certain amount of money as monthly payback. Going by the fee, the monthly cost of equipment leasing is sometimes lower than that of equipment loan. However, the rate depends on the lender and equipment you’re borrowing. Most equipment loans come with fixed interest rates and repayment terms. The interest rates vary according to the lender.
Who Qualifies for Equipment Financing and Leasing?
As it is, every business is in need of funds to purchase equipment can qualify for an equipment financing loan. However, the loan approval depends on the business’s financial history, credit score, and duration of operation. For a business to qualify for an equipment financing loan through Globelend Capital, the business must have been in active operation for at least 6 months.
An equipment financing loan can be a great option for business owners looking to get high-value equipment, even when their credit score is not perfect. In other words, you don’t need a perfect credit score to get approved for an equipment financing loan, since the equipment itself serves as collateral.
How Equipment Financing and Leasing Works
Equipment financing involves borrowing money from a lender to purchase equipment for a business. It is quite similar to most conventional loans. The loan amount depends on the type of equipment you want to buy, and this might affect your interest rate. A solid credit score and financial history will help make your loan approval easy and fast. Before getting approved for equipment financing, you’ll also be required to reach an agreement on repayment terms and the interest rate with the lender. Once you’re able to comply with all requirements, then equipment lenders might be willing to work with you.
On the other hand, equipment leasing entails borrowing equipment from a lender, on an agreement to pay a monthly fee. The lender might not own the equipment, but in a leasing agreement the lender will purchase the equipment and lease it out to you. After the lease period ends, you might be able to purchase the equipment from the lender at a very fair price.
Options for Equipment Financing
Small Business Loans:
The Small Business Administration loan program is guaranteed by the federal government to cover a certain portion of the loan expenses if something goes wrong with the loan. Despite the guarantee, most local banks are very selective when offering an SBA loan. However, some certified lenders are always willing to offer one. Generally, the SBA loan was designed to serve as an alternative loan option for small businesses that are finding it difficult to get approved for traditional financing.
Business Line of Credit:
A business line of credit is one of the easiest ways for a small business to access quick funds, repay the amount borrowed, and access funds again. The flexibility of lines of credit has made them a go-to financing option for most small business owners. A business line of credit differs from most conventional loans in that the borrower is given access to a lump sum which he/she can withdraw little by little based on the amount they need. They pay interest only on the withdrawn amount.
Merchant Cash Advances:
This financing option may not be directly regarded as a loan program for auto repair shop owners, as merchant cash advance companies don’t actually lend money to auto repair shops. However, they often purchase future credit in return for providing upfront cash for small business, which an auto repair business can also benefit from. Merchant cash advances often come with different rates and repayment terms, depending on the lender.
How to Apply
Obtaining a business equipment loan can be a simple, stress-free process. However, everything depends on the lender you work with and how qualified you are for the loan. Once you show you have a good credit score and prove the financial health of your business with tax returns and bank statements, getting approved for a business equipment loan is a snap.
In addition to the above requirements, some lenders might ask for some information about the equipment you intend to purchase. This could also affect the approval of your business equipment loan. To get approved for an equipment financing, here are the documents you need:
- Driver’s License
- Bank Statements
- Statement of Tax Returns
- Credit Score
- Proof of Business Ownership
- Equipment Quote
Why Globelend Capital?
At Globelend Capital, we understand the importance of equipment to the growth of your business. Whatever industry you’re in, we know that it’s vital that you have easy access to funds so you can purchase equipment for your business – and we know how to deliver equipment financing your business needs. Our loan approval requires no hard collateral. If you meet all of our requirements, you can rest assured that your equipment loan will be approved in no time.