Equipment Loans
Equipment loans are designed to help cover the cost of new machinery or materials. Companies in various industries can qualify for a loan using equipment as collateral. In most cases, only a small down payment is required. Equipment financing also includes leases and sale-lease buybacks
Overview
Depending on the industry, most companies have to purchase equipment and machinery to operate. These items range from manufacturing machines to fleet vehicles to high-end electronics. Unfortunately, paying for these items can be problematic, particularly for new businesses without any sales history.
An equipment loan is often a viable solution since it’s easier to qualify for than a traditional bank loan. The approval process is expedited because the loan is secured on collateral rather than the borrower’s creditworthiness. This also means upfront fees and interest rates are lower. If the borrower defaults on the loan, the lender can repossess the equipment.
Finally, equipment financing can take the form of a sale-leaseback. In this case, the company sells machinery it already owns to a leasing agent. Next, the agent leases the same equipment back to the company so that operations are not impacted. A sale-leaseback is an excellent financing option for businesses that don’t want to borrow from traditional lenders.
Loan Highlights
- Equipment loans can cover almost all types of machinery. In some cases, funds can even pay for high-end software.
- Purchase vehicles and tools used in your business operations.
- The equipment acts as collateral on the loan, ensuring a lower interest rate and more favorable repayment terms compared with an unsecured loan.
- In some cases, the term can range from months to 10 years, and in some cases extend up to 25 years.
- Typically, equipment loan interest rates start at 4% and are capped at 15 percent.
- The borrower can pay off the loan early with no penalties.
Pros
- Low down payments mean lower upfront costs.
- Leases can reduce the cost of ownership.
- Sale leasebacks are excellent for fast financing for other business needs.
- Most equipment loans don’t require excellent credit history.
- Leasing makes it easier to upgrade to new models.
Cons
- Leased equipment is no longer eligible for future financing.
- Approval for equipment financing can take longer than other loan types, depending on the lender.
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Begin your path to funding with a simple, informational application.
Contact Info
Address: 5340 S Verde, Mesa AZ 85212
Phone: 623-230-7528
Email: Contact@revitalcap.com