Monday, 24 July 2017
Equipment Financing for Small Business Owners
If your startup business is service or product based, with the required equipment is essential to keep your business operate smoothly. For the first time, upgrading, replacing or purchasing may put a severe pinch on the owner’s cash flow but with the precise equipment financing, you can obtain those things which your venture needs without building a considerable dent in the bottom line. This type of financing might take various different types.
Specifically, equipment financing is created for the purchasing business equipment. Your venture makes payments on the borrowed money and as soon as the debt is paid again then you own that equipment clear and free. With certain ways of financing like equipment financing, it itself provides a collateral to the lender presumes ownership in case you don’t repay. The lender might need a personal guarantee based on the structure of financing agreement. This permits the lender to place a claim to assets of your business like the equipment itself in case you default. The personal guarantee also does this thing for your personal assets and that it essential to know exactly you are agreeing before you give cash to other.
Essentially, one doesn’t have to buy the equipment at the time of need rather one could lease it. This means that you are paying the rent to the owner for the equipment every month same like leasing the office for your venture. When the tenure of your lease term ends then you can wish to renew the agreement or might buy the equipment right away. Leasing provides benefit over financing and in that case you are required to provide any kind of down payment for obtaining the equipment which you expected along with the loan. Usually, one is not bordered by any requirements of personal guarantee, collateral or lien. It’s quite easy to meet the leasing arrangement criteria other than personal or business credits for financing your business. However, the cost difference is the potential drawback behind this. Leasing equipment for longer period means that you have not given ownership but one might finally pay the rent other than buying the equipment.
There are multiple financing avenues for owners of small business and they get that equipment at the time of need. But deciding which way is the best to fit your business depends on various factors described below:
• Your business and personal credit scores
• From how long you are doing business
• Your yearly revenues of business
• The required amount of loan
• Your desired repayment terms
Moreover, not entirely but if you have seen the application process of bank or lender then you won’t agree with the buyout options and will change it accordingly and this way you have choices. Always make sure that you are found the right lender who not only meets your business and financial requirements but also proffers top rated customer service. On the whole, an opting lending process is also not easy way still you have to take the risk.