How to Finance Equipment for your New Business
When a business needs equipment, it is a common move to turn toward equipment financing—that is, taking out money to purchase the equipment. This article looks at the steps that go into the process.
Step 1: Determining Your Needs
The first step in obtaining equipment financing is determining how much money you need and what type of financing you are after. For example, a lease-to-own arrangement will let you use the equipment immediately while also making payments toward owning it permanently. Other variations include plans that require no money down and plans that let you put off the first payment for a certain period of time.
You should also consider the agreement’s length. In general, a shorter financing agreement will have higher payments with the upside of being paid off sooner. A longer one functions in the opposite way: You will make the payments over a longer period of time, but they will be smaller each month.
Step 2: The Application
The next step to obtaining equipment financing is the application. Depending on the lender, you will need to fill out an application, talk to a representative of the lender, and provide certain financial documents. The documents can include items like your business plan and financial statements. Per Forbes.com, lenders will also delve into your credit history and assess your outstanding debt.
If you are having trouble deciding between lenders, consider which one seems easiest to work with and most interested in your business. Also take into account the interest rates each offers.
Step 3: After the Application
If your application is rejected, consider the steps you need to take to make future applications successful. For instance, improving your credit rating can help you succeed during your next attempt.
If your application is accepted, congratulations! After the equipment is purchased, you will have an opportunity to make sure it is the equipment as promised. Then, you can put it to use for your business.
For information on other business topics, be sure to check out Commercial Capital Lending’s other blog posts.