Tips and Tricks for Equipment Financing
Are you having trouble qualifying for a loan for the equipment your business needs to thrive? In that case, you may need to look outside the box for alternative types of equipment financing. There are many ways to obtain loans, leases and working capital for equipment. Here are a few tips and tricks you may not have considered:
1. Look Into Equipment Leasing
One of the first avenues for securing needed business equipment is through a lease. Qualifying for a lease can be easier than for a traditional loan, and it provides many benefits. Here are a few ways leasing can help:
- Lower monthly expenses
- Easier future upgrades
- Fixed payments
- Lower down payment
This can be an ideal solution when it comes to high-tech equipment that needs to be replaced often. For example, if you need to purchase a company management software system, it can pay to lease it. That way you’re always at the cutting edge of technology.
2. Use Invoice Factoring for Equipment Financing
Factoring invoices is basically selling long-term assets in exchange for a large cash advance. Depending on the amount of customers you have, factoring can give you the capital needed for straight-up equipment purchases or covering down payments for other loans. This option is very attractive for buying things such as office equipment, laptops, mobile devices and other types of tech for your company employees. Factoring a few invoices can completely pay for these systems, and you don’t have to worry about interest payments at all.
3. Check Into Lease Buybacks
If you already own a piece of valuable manufacturing equipment or construction machinery, you may want to consider using a lease buyback options to obtain capital for purchasing other equipment. In this scenario, you can still use the machinery, but you switch to making lease payments on it. In exchange, the leasing company buys the equipment from you, resulting in a large infusion of capital that may be enough to cover the cost of a skid loader, diagnostic system or other type of equipment. At the very least, this option reduces the amount of any equipment financing you need.
4. Look at Programs for Startups
Many equipment financing companies have programs in place for new businesses. It’s understood that a startup may not have the solid cash flow or huge customer base yet for a traditional loan. However, your business can still be a great investment for lenders. With startup programs, you can get equipment financing for the things you need by using the equipment itself as collateral.
There are pros and cons to every financing option. The best one depends on your circumstances. Talk with a financing professional to make the right choice.