How Equipment Financing Helps Small Business Owners
How can your company benefit from equipment business loans? Your responsibility as a business owner is to provide high-quality products or services to your customers. The equipment you use contributes enormously to the quality of the products and services you provide. Regardless of the type of business you own, skimping on equipment quality will cost you more in the long term.
With that said, it’s important to invest in high-grade equipment for your business. However, quality equipment does not come cheap and many small business owners don’t have the funds to purchase needed equipment upfront.
Equipment business loans will provide you with the working capital you need to purchase the equipment you need. The equipment you’re going to purchase acts as collateral for the loan. This means that you don’t have to pledge any personal or business assets. But if you default on the loan, the lending company will have the right to repossess the equipment.
If you’re still on the fence about applying for equipment financing, here are seven benefits you might want to take into consideration:
1. Fund Your New Equipment Purchases
Does your business rely on equipment for daily operations? If so, then you can’t afford to have faulty equipment. Upgrading or buying new equipment is one of the best ways to increase business productivity. For larger and more expensive purchases such as machinery, vehicles, and other technical resources, fixed equipment term loans can be your best option. However, ultimately this depends on the lender you’re working with.
2. Current Equipment Needs Frequent Repairs
If the cost of equipment repairs are piling up, you might want to consider buying new equipment instead. To figure out a more cost-effective solution, you can compare projected repair costs against the price of new equipment. You might be surprised to find out that repairs have the tendency to be pricier than replacements, especially if the repairs can’t correct the source of the problem.
Ask yourself – do the repair costs exceed replacement costs? Does your equipment break down frequently even after repairs have been made? These questions will help you determine whether you should replace your current equipment or not.
3. Add New Product/Service Lines
As you grow your business, you may find it necessary to add more products or services to your selection. In doing so, you may then need to hire more employees, expand your business location, or purchase new hard assets. Equipment business loans can help you fund the equipment or machinery you need to purchase in order to add new products and services. If you want to grow your business and increase traffic and sales, adding in-demand products or services can greatly help you achieve this.
4. Better Cash Flow Management
Once your equipment business loan has been approved, lenders will usually give you a lump sum payment which you can immediately use for your equipment purchases. Lenders will usually ask you to repay the loan in fixed monthly payments until the end of the term. This setup allows business owners to properly plan their cash flow and create a budget to manage their finances.
5. Conserve Working Capital
When small business owners apply for equipment loans, it doesn’t necessarily mean they can’t afford to buy the equipment. In fact, many entrepreneurs can easily purchase equipment with the help of equipment loans. However, buying costly equipment can make a serious dent on your working capital.
On the other hand, securing an equipment business loan helps you conserve working capital. The funds from a loan can help you purchase much-needed equipment without depleting your working capital. You will breath easy knowing you’ll be able to make payroll, and fully fund advertising, as well as pay your utilities along with other daily business expenses… without tapping into your operational capital!
6. Reduce Incurred Costs
There’s no denying the fact that equipment purchases can be expensive. Since technology is continuously evolving, business owners usually spend thousands on equipment that will eventually become obsolete in a few years.
By applying for equipment loans, you won’t have to pay for the equipment upfront, therefore reducing your expenses. You get to own the equipment after you’ve fully paid for it. This means you have the liberty to keep the equipment, upgrade it, or sell it.
Equipment Business Loans for Your Business
Equipment business loans are a great option for small business owners looking to buy equipment that will improve their business operations. Whether you need vehicles, furniture/fixtures, or appliances, an equipment loan will cover the cost of these purchases. SMB Compass offers equipment financing for small businesses like yours.