If you own a small business, then you know how frequently you need to change the equipment to perform the daily tasks. The problem is that you need a considerable amount of money to purchase that equipment. It can strain your cash flow. For this purpose, equipment financing can prove beneficial for your business.
You might be wondering: What is equipment financing? Here, we will discuss the basics of equipment financing before moving on to its qualification criterion.
What is equipment financing?
Equipment financing is a type of loan used to purchase business-related equipment such as scanners, printers, and vehicles, etc. Equipment loans will provide you periodic payments with interest. It is an excellent option for you if you do not have enough credit to purchase the equipment.
Like other loans, they are difficult to qualify for, and you need a good credit score.
How does it work?
You have to pay a percentage of equipment overall price, and that will be considered as a down payment. Then after some time, you will regularly pay as mentioned in the terms and conditions of the loan.
Equipment financing is different from equipment leasing. In equipment leasing, you pay the owner of the equipment periodic rent to use the equipment for the specific period.
The advantages of equipment financing:
- Once you have paid off the total amount of the equipment, you will become the owner of it.
- When purchasing the equipment loan, it is not necessary to come up with 100% of the required funds.
How to qualify for it?
If you have been in business for more than years or are new in this field, you can still qualify for equipment financing by following these steps:
- Cash flow-based financing:
If your business is facing issues regarding credit, but you have a strong business history but a bad credit score, you can qualify for the loan. In this case, your credit score will be ignored and lenders will only look at your business history.
- Collateral based financing:
You can get qualified for equipment financing for any type of business if you are willing to offer collateral or pay 50% of the down payment. Collateral can be anything such as your personal assets.
In this case, you can easily qualify for equipment financing.
- A business plan:
A persuasive and well-written business plan can help you to qualify for the equipment financing. The lenders will look at your business plan to determine whether you can repay the loan.
Your business plan must include the profit and loss statement, the cash flow statements and
a three-year plan on how your business is going to flourish.
You can qualify for equipment financing if you are willing to follow these steps. It all depends on your business needs. Equipment financing does make sense as it will prevent your cash flow from straining, and at the same time, you can upgrade your business equipment.
We work with one of the best lenders: Kiploans when it comes to equipment financing.
Below are the requirements:
- Amount: Up to $5M per piece. (Startups can get funding up to $50,000, could be more depends on the schedules)
- Speed: 7-15 days
- Rate: starting at 5% (Term: 1 to 5 years)
- Personal Credit Score above 580 (with good quality or track records) (680+ for startups)
- Revenue showing he can pay back the monthly payment.
You Can directly apply on here: Equipment Financing Application