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9 Things Small Businesses Can Finance With an Equipment Loan

9 Things Small Businesses Can Finance With an Equipment Loan

When you think of financing equipment, what do you think of? Forklifts? Cranes? You probably consider all kinds of heavy machinery, but there are other types of equipment you can finance that a small business may use.

To understand what some practical pieces of equipment are that small businesses can finance with an equipment loan, we’ve asked 9 thought leaders to share their recommendations.

Computer Hardware and Software

My company has financed computer hardware and software as well as furniture.  We are not an equipment intensive business, so there are not a lot of opportunities for us to finance equipment.  We have paid cash for computer equipment and furniture in the past, but decided to finance the last time around.  Financing made the decision to go with higher end computers and furniture an easier choice. Of course they are more expensive, but financing them allowed us to spread the cost out over time.  read more

10 Equipment Financing Tips For Startups

10 Equipment Financing Tips For Startups

Running a startup is, in itself, a challenge. You might have minimal experience or be low on funds. You might even need to purchase equipment for your startup. Being new to the world of equipment financing can be daunting, with so many different options and risks to take. How do you know you’re making the right choice?

We asked ten business execs, “What is your best tip for startups who seek financing for equipment?” Below you’ll find advice to guide you in the right direction in the world of equipment financing. read more

8 QUESTIONS TO ASK EQUIPMENT FINANCING COMPANY OTHER THAN, “WHAT’S THE RATE?”

8 Questions To Ask Equipment Financing Company Other Than, “What’s The Rate?”

Are you looking to take out an equipment loan? Financing equipment can be a challenge. Between finding the right equipment and dealing with contracts, there are so many options to choose from. Before you do so, it’s important to have the right information.

We asked eight thought leaders to share which questions should you be asking your equipment financing company other than “What’s the rate?” to ensure you get the best possible deal for your business.

Look at the Monthly Payment

In addition to the rate, the monthly payment is as, or more, important.  Rate is an obvious question and no one wants to pay a higher rate than they have to, but Cash Flow is King.  If the monthly payment works for you, and your ROI is satisfactory, then the financing will make sense for you regardless of what the rate might be. The buyout is very important as well. Is my last payment really my last payment or is there a buyout I have to make after my last payment?  Better to know now vs. knowing later. read more

FINANCING HEAVY EQUIPMENT: 5 THINGS TO KNOW

Doing anything for the first time is risky, whether it be getting a new job or founding your very first startup. Financing heavy equipment for the first time is no different. There are so many questions that need to be answered, such as which equipment financing company can you trust, what are the requirements, and how long is the entire process going to take. These are all valid questions to ask if this is your first exposure to equipment financing.

Before you begin your search to find the right financing for heavy equipment here are a few things should know:

Financing Equipment Can Reduce Costs Upfront

Buying the equipment upfront is not always a great idea. You have to take into consideration the amount of money it takes to purchase your heavy equipment, then look at all the other areas of your business that could have benefited from having that money. If you cannot come to the conclusion that this is the best idea, do not go through with it. Buying equipment upfront will only hurt you in the end. Although there are some negative aspects to financing, like being in debt, in the short-term outlook it is possible to be smarter with how you spend your money. read more

WHAT IS EQUIPMENT FINANCING AND LEASING?

When you want to finance or lease equipment as a small business there are a couple of different ways to do so. The most important thing to understand is that just about any asset used to conduct a business could be considered “equipment.” You have the choice to either lease or finance an equipment acquisition.

For many years the two methods were very different from an accounting standpoint, but after recent changes to the Generally Accepted Accounting Standards, they are now pretty close to the same thing. Although the differences are subtle this blog post discusses what they mean and how they can help you make the best decision when your business needs equipment. read more

FEES, FEES AND MORE FEES

Today there are fees for just about everything we do and in the business environment many are justified and many are simply a way for a company to make extra revenue. Banks and other commercial lenders are notorious for their fees, many of which are not disclosed to a borrower until they are signing loan documents.

We believe you should know what fees are being charged and what they are for. We’ve compiled the fee list below so the next time you apply for a commercial lease or loan you’ll be a little smarter. read more

INTERIM RENTS

Interim rent was originally conceived to compensate commercial lenders for the time their funds were invested beyond the traditional 30 days for the next first scheduled monthly payment of a lease. This concept is also employed in consumer real estate loans when ‘extra interest’ is charged for the days between an existing loan being paid off and the new loan becoming due. At its core this concept makes sense. Let’s assume a lender funds a loan or a lease on the first of the month and the next payment is scheduled on the 15th of the following month. Most lenders’ original calculations assume that payments will be made every 30 days and in the scenario above the first payment was actually due in 45 days. There are 15 days that the lender does not have the use of their funds and for which time they are not being compensated. So the logical solution is to pay the lender ‘interest’ at the same rate as the loan or lease is structured at for the extra 15 days. Seems fair but that’s not what’s being done by most commercial lenders. read more

EVERGREEN CLAUSES

The evergreen clause is a masterpiece of deception used by some leasing companies, brokers and commercial lenders. According to BusinessDictionary.com an evergreen contract is an “agreement between two parties that is automatically renewed (rolled over) after each completion or maturity period, until canceled by either party”. The way this is applied in equipment leasing situations is to provide the customer with a fixed price option to purchase the asset being leased once the initial term of the contract has expired and the customer has made all payments. This is usually negotiated before the customer has committed to the lease and is generally part of the customer’s economic evaluation and ultimate decision. The customer is even given a separate document that evidences they have the right to purchase the asset for a specific price, usually $1.00. read more