Retain Your Profits Upfront by Choosing the Right Equipment Financing
Most new ventures involve some sort of financial investment. In addition to well-trained staff, your business requires the appropriate equipment to provide a quality product or service to your customers. Whether you are looking to retool a facility or make an initial purchase, finding the best equipment financing to suit your needs is key to keeping your business profitable from the start.
Fortunately, a variety of equipment financing options are available:
1. Peer-to-Peer (P2P) Loans
If you have a low credit score or lack the other requirements for loan approval, borrowing money from your friends, family, or business network is an ideal way to purchase equipment. By not dealing with a bank or other traditional lenders, you can work out an individualized repayment schedule and avoid the higher interest rates associated with conventional financing.
2. Short Term Loans
This type of loan is a great option if you need quick approval to purchase equipment and can afford to borrow at a slightly higher interest rate. A shorter loan repayment schedule means that you will own the equipment sooner. A portion of your profits is no longer funneled to the bank but rather back into your pocket.
3. Small Business Administration (SBA) Loans
Businesses that have been operating for a year or more may qualify for an SBA loan. This loan generally offers lower interest rates with extended repayment terms. Revolving lines of credit and short term loans are also available through the SBA. However, funding approval can take up to 2 months. If your business needs to purchase equipment quickly, an SBA loan may not be your best option.
4. Business Credit Card
Earn cash back, points or other rewards for your company by using a business credit card. This option is ideal for equipment purchases totally less than $100K. Keep in mind that if you are unable to pay off the credit balance quickly, the high interest rate charged by this type of financing may outweigh your earned reward benefits.
5. Equipment Leasing
Unlike the other financing strategies listed above, equipment leasing allows you to rent the necessary equipment. No large deposits are required up front and no additional credit lien is levied against your business. The leasing company also provides delivery, set-up and maintenance of your equipment. Equipment leasing expenses may even be tax-deductible.
By selecting one of these financing options, you can outfit your business with the necessary equipment while minimizing any impact on your profits.