How Does Equipment Financing Work?
For business owners in many industries like transportation and manufacturing, growth is a direct result of purchasing more equipment.
If your plans for growth are larger than what your current cash flow allows, how can you afford to buy the needed equipment or industrial machines to reach your goals?
That's where equipment financing come to the rescue. Equipment loans provide the working capital needed to take your business to the next level.
If you've ever taken a car loan before, you are already familiar with the overall structure of an equipment loan. The total amount you borrow depends on the type of equipment you need to purchase and whether it's new or pre-owned.
Since the funding is secured with the equipment itself, there are no additional collateral requirements to get approved by a lender. Most equipment financing interest rates are fixed with monthly payment terms.
How to Qualify for Equipment Financing?
Since funding is secured with the equipment as collateral, a majority of business owners can get approved.
The total amount you are looking to borrow and the APR you'll get from a lender depends on three factors:
- Value of the equipment
- Your company's financial history
- Your credit score
Your credit score plays a smaller role as compared to other types of loans. Even if you have less than stellar credit, you can get approved for funding.