Funding the purchase of major equipment is a costly endeavor without the help of equipment financing. Company cars, office furniture, computer parts, machinery, and a multitude of other things are a necessity that can really take a toll and is why equipment loans for small business entrepreneurs exist. Equipment lending is the buoy to keep you afloat.
Commercial equipment loans are a secured way to purchase the large inventory that you need without the undue stress weighing on your business. You can continue to run your business and pay back the equipment financing as you go.
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Most businesses use some form of financing when purchasing new equipment, but the smaller you are, the more daunting those price tags look.
But, there is no more need to worry, business equipment financing is the best solution to this predicament. By using alternative financing methods such as equipment loans, you can continue to work and spread out the repayment for what works best in your company. Business equipment loans support small businesses by keeping necessary equipment affordable.
Even if your credit score is less than favorable, it is still possible to obtain equipment financing. Wisco specializes in being able to provide equipment loans for bad credit to businesses who fall into this category. They help you get a loan that works for you, not against you.
There are 2 main types of equipment financing that businesses can take advantage of: Equipment Loans and Equipment Leasing. Each of these business equipment financing options is slightly different, so it’s important to understand the details of each.
This equipment financing product allows you to obtain the capital necessary to purchase equipment for your business and uses the equipment itself (the asset) as collateral should you default on the loan payments.
It is typical for the repayment period to be 10 years or more and for a loan of up to 80%-100% of the equipment value to be provided. But, lenders offering 80% of equipment value for a small business equipment loan is the most common. This means a business owner will still need to make a substantial down payment to get the loan.
There are a few factors that directly influence the interest rate a business equipment financing lender will offer and whether or not the borrower will be approved. These include:
Some of the benefits of securing an equipment loan rather than leasing equipment are:
Assets - Once the loan is paid back, the equipment becomes the property of the business owner and is a valuable asset for their business to retain.
More favorable rates - If you ever need another loan to help the business grow or raise capital, the purchased equipment can act as collateral. This is deemed a less risky investment for lenders and can lead to more favorable rates or terms.
Business equipment financing covers more than just loans to purchase equipment. In situations where the business does not have enough funds to make the down payment for a loan, or needs equipment that needs to be replaced regularly, equipment leasing is an attractive option.
Equipment leasing is an attractive equipment financing alternative to buying expensive technology outright. Depending on the cost of the equipment, interest rates can vary.
For many entrepreneurs, obtaining an equipment loan may not be a viable option. Leasing offers an array of benefits that can help make this type of equipment lending possible.
No downpayment. Leasing equipment does not require a down payment, which helps business owners who may not have enough cash to pay for it outright.
Interest rates are typically lower.
Leasing makes it easier to replace equipment regularly. It is important to understand what the penalties are for ending a lease early before you sign anything.
Some leasing contracts provide a purchase option.
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Which equipment financing option to choose is completely up to you and your business needs. On one hand, equipment loans allow you to be able to obtain the capital needed to purchase the equipment your company will use for many years to come. At the end of the repayment term, the equipment belongs to you and becomes a useful asset.
On the other hand, if you do not desire to own the equipment or have to worry about how much value it will lose over time, then leasing is a viable equipment financing alternative that can provide you with equipment rather quickly without the need for cash.
With both options, the fact that you can obtain equipment without the need to put your business line of credit or working capital on the line is a great benefit to many. Business equipment financing can be used for new or used equipment and loan options are generally quite flexible.
Ready to Get Funded?
If you’re ready to take the next step, start our online application. It takes less than 5 minutes to complete and gets you one step closer to securing equipment financing for your business.