When shopping around for important business equipment, finding high-quality products isn’t the only thing you should consider. You also need to figure out how to finance your purchase. Many business owners use equipment financing because of how fast and easy it makes everything. What are the advantages of this type of financing and where can you find it?

The Basics of Equipment Loans

Usually, when lenders mention equipment financing, they’re talking about equipment loans. These loans help you purchase a wide variety of equipment. You can get funding for smaller items, such as specialized tools, or middle-market and large-ticket equipment, including construction machinery.

Unlike many other loans, equipment loans don’t require you to offer collateral from your business. You don’t need to risk any of your inventory or real estate assets. Instead, the machinery you purchase takes the place of your loan guarantee.

This factor makes life easier for your business. Thanks to having the equipment as collateral, you can qualify for exceptional loan terms: low interest rates, low or no down payments and comfortable monthly costs. The application process is faster and simpler, too.

Equipment Leasing Options

Sometimes, lenders recommend equipment leasing for your business. This operates similarly to a loan, with monthly payments and all, but you’re not purchasing the equipment. Instead, you’re making payments to use it.

At first glance, the higher interest rates with this option may turn you off, but there are many benefits that only come with leasing. For one thing, you don’t have to worry about your equipment becoming obsolete. The lease usually lasts a few years, and once it’s up, you can choose a different product to lease. Old equipment out and new equipment in.

Another reason leasing is incredible is that it gives you access to low monthly payments. Compared to a loan, leasing saves you money in the short term. You end up with more capital to use for your business operations, plus you can use your new equipment to generate even more profits.

Equipment Financing Lenders and Lending Programs

Where can you go to get approved for equipment lending? It depends on a few factors: your credit rating, available funds and your long-term goals.

Traditional banks provide term loans for equipment purchases, but you need excellent credit to qualify. You can also approach private lenders that specialize in equipment financing. Many times, these businesses work exclusively with equipment lending customers. If you own a small business, SBA 7a and 503 loans are also options with great interest rates.