10 Myths About Equipment Financing

10 Myths About Equipment Financing

10 Myths About Equipment Financing

Unraveling the myths about equipment financing for businesses, we have gathered ten insightful answers from founders, CEOs, and other industry leaders. From the idea that leasing could mean your company will lose money to debunking the myth that large buyers always get discounts, this article provides a comprehensive understanding of equipment financing.

  • Could Mean Your Company Loses Money
  • Is Industry-Specific
  • Should Only Be Considered as a Last Resort
  • Is Too Expensive
  • Only for Big Businesses
  • Financing for Used Equipment is Impossible to Get
  • Companies With Less than Great Credit Can’t Finance
  • Is Only for Equipment
  • Is Complicated and Time-consuming
  • Large Buyers Get Discounts

Could Mean Your Company Loses Money

One myth about equipment financing for businesses is that it means losing money. But here’s the truth: Equipment financing, especially through leasing, can actually be a smart move. It lets companies get the latest and most efficient equipment without hefty upfront costs. By choosing leasing, businesses can stay ahead of the game, keeping up with tech advancements and industry standards.

Loren HowardLoren Howard
Founder, Prime Plus Mortgages

Is Industry-Specific

One common myth about equipment financing is that it is limited to specific industries. However, equipment financing can benefit a wide range of businesses across various sectors.

For example, a technology startup may need to lease computers and servers, a restaurant may require financing for kitchen equipment, or a healthcare facility may seek funds for medical devices. Equipment financing providers cater to the needs of diverse industries, offering customized solutions to suit their requirements.

By debunking this myth, businesses from different sectors can explore the advantages of equipment financing and find tailored options to support their growth.

Roy LauRoy Lau
Co-Founder, 28 Mortgage

Should Only Be Considered as a Last Resort

One myth about equipment financing for businesses is that companies should only consider it as a last resort. In reality, equipment financing can be a strategic decision that helps businesses conserve cash flow, improve working capital, and increase growth opportunities.

By spreading out the cost of equipment over time, businesses can align their expenses with the revenue generated by the equipment. It allows businesses to upgrade or acquire necessary equipment without depleting their financial resources upfront.

For example, a start-up restaurant might choose equipment financing to acquire commercial kitchen equipment without draining their funds. In summary, equipment financing is not a last resort but a valuable financial tool for businesses to optimize their operations and drive growth.

Jason CheungJason Cheung
Operations Manager, Credit KO

Is Too Expensive

A prevailing misconception suggests that equipment financing is too expensive. However, this myth doesn’t hold up. Reputable commercial lenders collaborate closely, tailoring solutions that align with your financial standing while optimizing your cash flow.

With competitive interest rates and favorable terms, financing becomes an economical choice. Notably, a report by the Equipment Leasing & Finance Foundation revealed that 47% of businesses opt for financing to bolster cash flow. This, in turn, safeguards the vitality of your enterprise, shattering the notion that equipment financing drains resources.

Tobias LiebschTobias Liebsch
Co-Founder, Fintalent.io

Only for Big Businesses

There’s a myth out there; many think equipment financing is just for big, established companies. That’s not true. In fact, whether you’re starting out or you run a smaller business, equipment financing can be for you too.

There are many financing options tailored to fit different business sizes and needs. So, startups and smaller companies can benefit just as much. The main advantage? Businesses can get the equipment they need without using up all their cash at once. It’s a smart way to keep money flowing while investing in growth.

Rafael Sarim ÖzdemirRafael Sarim Özdemir
Founder and CEO, Zendog Labs

Financing for Used Equipment is Impossible to Get

One common myth in equipment financing is, “Getting financing for used equipment is not possible.” If a business doesn’t need the latest technology and equipment, it can opt for used ones. However, some believe that financing doesn’t cover used items.

The truth is, many lenders will lease or loan for secondhand equipment. You just need to find the right match. As long as the equipment works well and has no issues, you should be good to go.

Samantha HawrylackSamantha Hawrylack
Founder, How To FIRE

Companies With Less than Great Credit Can’t Finance

One pervasive myth about equipment financing for businesses is that only companies with a pristine credit history can qualify. In reality, many equipment financing firms work with businesses that have a range of credit scores.

While a solid credit score might secure better terms or rates, having some blemishes on your credit history doesn’t automatically exclude a business from obtaining financing. This flexibility is because the equipment itself often acts as collateral for the loan, reducing the lender’s risk.

Therefore, businesses with less-than-perfect credit histories still have avenues to explore in equipment financing. It’s always crucial, however, to shop around, understand terms fully, and ensure that the financing chosen aligns with the company’s financial capacity and growth strategy.

Jake MaslowJake Maslow
Owner, Streetwise Journal

Is Only for Equipment

Many people believe that equipment financing is solely meant for acquiring equipment. However, this is not accurate. Apart from equipment purchase, this financing option can cover expenses like installation, upkeep, and enhancements. This showcases the broader utility of equipment financing beyond just equipment acquisition.

David BuiDavid Bui
Director and Business Specialist, Schmicko

Is Complicated and Time-consuming

One myth about equipment financing is that it’s complicated and time-consuming to get approved for funding. In fact, businesses can now apply online in a few steps and receive approval within hours. Plus, the paperwork is minimal—you don’t need to provide financial statements or any other complicated documents.

David Rubie-ToddDavid Rubie-Todd
Co-Founder and Marketing Head, Sticker It

Large Buyers Get Discounts

One myth is that those who buy large amounts of equipment will get good financing from the seller. Equipment sellers don’t give discounts for those with major sales, even if you use them for financing. They also don’t offer discounts for cash payments. Equipment sellers charge full price no matter how you finance your purchase.

Tanya Klien Tanya Klien, CEO, Anta Plumbing

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