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How to Get Small Business Equipment Financing

small business equipment financing

Launching or expanding a small business is a costly endeavor and one that requires financing to transform your vision into reality.

One of the largest expenses among small businesses is covering the costs of equipment and vehicles, which for some companies form the very fabric of their operation.

Whether you’re working in a warehouse, a construction site, or running a delivery service, it’s the heavy machinery and equipment that enables you to operate your business effectively.

Small business equipment financing is available to help business owners secure the expensive machinery needed to meet their growing consumer demands.

Commercial Bank Equipment Financing

Most commercial banks offer equipment financing to businesses, enabling companies to access all the machinery needed to thrive in the workforce. For established businesses without an urgent need for capital, commercial banking should be your first choice for a loan, as they can get you the lowest interest rates with the longest repayment terms.

Equipment financing can be used to cover essential machinery, delivery trucks, electronics, and company vehicles. You can either choose to take out an equipment loan, in which you own the equipment and pay it off over time, or to lease the equipment, which entails a much lower initial investment.

Leasing offers a more affordable approach for small businesses, but the banks retain ownership of all equipment and will seize the equipment should you ever default on your payments. Once you meet the terms of the lease, you can choose to buy the equipment at a fair market price, renew your lease, or return the equipment to the banks.

Equipment loans are easier to qualify for than traditional bank loans and are made accessible to both new and established businesses. Your credit history and business financials will be used to determine the quantity of the loan issues.

Express equipment loans of up to $100,000 are available, with repayment terms ranging from 3 to 6 years. These loans enable you to be approved much more quickly, so you can access your new equipment right away.

Government-Backed Equipment Financing

For those who are ineligible for commercial equipment loans, the government is willing to partially secure loans to help you attain the necessary equipment. The U.S. Small Business Administration (SBA) offers government-backed equipment loans to small businesses.

To qualify, your business needs to be U.S. owned and operated, demonstrate a significant need for funding, employ fewer than 500 people, and earn less than $7.5 million in annual revenue.

The SBA determines loan amounts based on individual need and the purpose of the loan. However, loan amounts can be as much as $5 million with repayment terms up to 10 years. Collateral is needed to secure the loan, and they typically use your business and project assets as collateral.

Equipment leasing is also available to businesses that lack the finances to begin paying off equipment right away. Leasing equipment can provide a cheaper option, which is ideal for new businesses that haven’t begun making significant returns on their business.

Takeaways

Equipment financing and leasing provide companies with a way to acquire all of the needed machinery, electronics, and equipment to perform their jobs efficiently. Equipment loans are easier to qualify for than commercial loans, which make them more accessible to new entrepreneurs and low-revenue businesses.

Leasing is also available, which enables small businesses to access expensive machinery with lower initial investment funds. Whether you need funding for equipment or for the daily expenses of running your business or something else, Credibly can help.

To learn more about modern business funding solutions, contact Credibly today. To get started now, fill out our online pre-qualification request form.