Five Common Uses For Equipment Financing
Equipment financing is one of the more popular types of small business financing available today. True to its name, equipment financing serves as a method for business owners to pay for equipment they need when they might not have access to the required capital otherwise. Every business thrives on having the right tools at the right time, and equipment financing can allow for flexible access to these tools right when they’re needed most without a lot of overhead or delays.
Even with as self-explanatory as the term might be, we’ve still seen a lot of questions out there about what it can – and can’t – be used to pay for. If you’ve been considering getting additional financing to help your business but you don’t quite know what it can be used for, we’ve compiled a few of the more common uses and needs for equipment financing here:
Updating Technology: Not to sound too much like your parents, but the endless march of new technology affects us all, especially small business owners. Computers become outdated, new methods of tracking inventory and reaching customers get developed, tablets get broken, and suddenly your favorite old cash register just isn’t quite cutting it anymore. Equipment financing helps small businesses have access to the latest and greatest in business technology, or at least something newer than what they’ve been working with, and the impact on productivity and your bottom line can be felt almost immediately.
Outfitting a Kitchen: Plenty of people dream of owning kitchens, but not many of them expect all the upkeep and maintenance that goes into it. Between the demands of constant use and the need to maintain government-mandated health and safety standards, many of which revolve around the cleanliness and functionality of things like freezers and ovens, equipment loans are a popular method for kitchens to get the funding to replace that greasy old grill and give their patrons the safest (and most delicious) experience they can while still spending capital on other needed areas of the business.
Retail Remodeling: A lot of people think that equipment loans can be used to purchase new inventory for stores or e-commerce outlets. While the terms of equipment financing wouldn’t meet that need as well as dedicated inventory loans, equipment loans are a great way to remodel storefronts and warehouses. Particularly with the holiday season coming up, expanding your inventory space or allowing for more shelves for products is always a safe decision, and equipment financing allows for that more easily.
Elimination of Ownership Risk: Sometimes the benefits of equipment financing come less from what you’re buying as it does how you’re buying it. A business that hasn’t been open too long can use equipment financing to help mitigate the risk and uncertainty that comes with spending a lot of money on a certain asset until you can demonstrate how the asset helps your business through productivity, cost savings, and the like. With less of your own capital tied up in the equipment, you’re at much less risk of purchasing new tools and supplies.
Better Planning for Cash Flow & Expenses: Even after the financing has been provided for new equipment, the regular monthly payments can help a business better plan for monthly expenditures, cash flow, and unexpected expenses that can pop up by providing a set monthly cost for the equipment every month. That way, the next time something needs to be replaced, you’re already in a better spot than you were!