Having the funds to buy equipment to replace current machinery or devices or to simply be able to make your business more efficient is always the best option. However, most businesses find at some time that they are going to need to rely on equipment financing for upgrades, replacements or new equipment during an expansion.
Finding equipment financing is not always as easy as you may expect, especially if you are a start-up company without a lot of equity in your business and property. By using a few insider tips you can make sure that you have all the information necessary to support your application with equipment financing and increase your opportunity to have access to the money you need.
Have a Plan
A lender definitely wants to know that the company or person applying for equipment financing has a plan of action. This means that there is a written evaluation of the cost of the equipment that is needed as well as a direct correlation with how this will increase your revenue.
You should also carefully consider if you really need a particular piece of equipment or if there is a lower cost option available. This is particularly true if you are replacing telecommunication devices or computers where there may be less expensive options that provide just the same software and features as the specific brand or type you had previously considered.
Shorter Term Borrowing
When applying for equipment financing remember that the lender will want to see a reasonable repayment on the loan. This means that they are taking less risk while you are also saying that you know that this equipment is going to allow you to make those loan payments.
You will also end up paying a lot less for the interest on the equipment financing loan if you take out the shortest possible term to ensure you can make all the payments.
You should also look for a lender providing equipment financing that works with loans in the same sector of the economy as your business. These lenders will be aware of why you need the equipment and the potential revenue it can generate much more than a lender that knows nothing about your business.
