When you need to obtain, update or replace a critical piece of business equipment, such as a restaurant oven or a dry cleaning machine, equipment financing can be just the answer you’re looking for. Equipment loans are ideally suited for both startups and expanding businesses, providing fast access to the equipment you need to get your business going—and growing. Here’s a closer look at equipment small business loans and how they can benefit your small business.
Equipment loans are loans to buy business equipment that are secured by the equipment itself. Instead of putting up collateral such as your house or your business assets, you use the item you’re purchasing as collateral. If you don’t pay the loan back, the lender simply repossesses the item—so nothing you already own is at risk.
There are plenty of reasons why a small business owner may find it preferable to obtain an equipment loan instead of a traditional, general business loan.
You can get equipment loans from banks or from a variety of alternative lending sources, including companies that specialize in equipment financing. Working with a company that’s familiar with the options and can help match you with the right lender for your needs can streamline the process even more.
Find out the requirements for the loan before you apply. Although credit requirements are less stringent than with traditional loans, there may still be minimum credit rating levels or other criteria for an equipment loan. Get your business up to these standards before you apply.
As you close in on an equipment loan, be sure to read the fine print. Here are some things to ask about: