When financing the purchase of equipment or machinery, you will typically take a term loan that matches the lifespan of the piece you’re buying.
Computer equipment, for example, has a relatively short
lifespan so you would want to repay your loan over two, three or four years. On
the other hand, a piece of manufacturing equipment will likely last longer, so
you would want a longer-term loan.
You don’t want to be in a situation where you need to buy a
new piece of equipment and still be paying for the old one. You would be making
loan payments for equipment that’s not contributing anything to your cash flow
and THAT is something you want to avoid.
Here again, the loan will be secured against the value of the
equipment you are buying. A financial institution will lend you a percentage of
the assessed value of the piece—remembering that its value depreciates over
time.
Another popular option is to lease equipment. In a leasing
arrangement, the vendor retains ownership of the equipment and you pay a
monthly fee for its use. At the end of the lease, you will typically have the
option to either return the equipment or purchase it.
Leasing can be particularly appealing for equipment that
becomes outdated quickly because you can easily exchange your old equipment for
an updated version under a new lease agreement.
If you are opening a new business or already own want and you need equipment financing to obtain, update or replace equipment and your bank said, no! the SBA takes too long we can help! Equipment financing has never been easier with BizBoom360 One Stop Solutions powered by DAC and Bank Breezy. ONE online application, multiple offers and no impact to your credit score to find out how much you can qualify for.
I invite you to reach out if you have any questions. Email Info@BizBoom360.com Subject Line: Equipment Financing
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