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7 Things to Know Before The Paperwork

Small Business Equipment Loans: 7 Things To Know Before The Paperwork

For many entrepreneurs, it can be overwhelming to think about all the elements needed to get your business off of the ground. Oftentimes, things like rent, furniture, technology, etc. add up and require a huge initial investment on the owner’s part. Because of this financial burden, many look to small business equipment loans to help give them a boost!

Although these financing options may seem tempting, it is important to ask the right questions before signing any paperwork. That is why we sat down with seven small business leaders and asked them what you should know before moving forward with any equipment loan. Keep reading to learn the tips and tricks from people who were once in your shoes!

Early Payoff Language

You’re going to pay more for the equipment when you finance it than if you paid for it out of pocket. This is obvious and every small business owner knows this, but it can be a mental challenge for a small business owner that is used to having no debt and paying for everything up front. For a small business owner that typically pays cash for equipment, when signing equipment finance paperwork, you should know what the early payoff language is. Make sure you know what the calculation will be should you decide to pay the loan off early.

Carey Wilbur, Charter Capital

Exhaust All Other Resources

Before signing the dotted line on an equipment loan, business owners should make sure that they have exhausted all other resources. While getting an equipment loan can be a good financial option for some, equipment leasing may be a better choice, especially for those who are just starting their business adventure. Equipment leasing will allow new business owners to avoid a large down payment and ease the struggle of getting loan approval. Leasing means that business owners can get to using their equipment right away without having any holdups or having to put down a large sum of money.

Rex Murphy, Montauk Services

Research Given Interest Rates

Before signing off on an equipment loan, make sure that you have done thorough research on the interest rate you are being offered. Be sure to look into how close that number is to the median percentage for an equipment loan and also check in with other lenders to see what they are offering. Interest rates make a huge difference on a loan and it is crucial to make sure you are being given a fair rate.

Vicky Franko, Insura

Terms of Agreement for Damages

Understand the terms of the agreement when it comes to any damages. While not common, severe damages to equipment do happen and you must know how they impact your agreement. What are the terms of the warranty? Are you eligible for repairs? Do you need to replace the equipment? Conditions for situations like these tend to be an afterthought but could end up costly if you don’t understand them. No one should enter into an equipment loan without proper legal review of the loan documents.

Dan Reck, MATClinics

The Marketing Plan

The marketing plan after the paperwork is something that often gets overlooked by business owners financing new equipment.

“Great, you’re now the proud owner of XYZ equipment! How are you going to produce a positive ROI on your new investment?”

Having a marketing plan to execute after receiving equipment can help justify a deal and align your expectations with realities.

Brett Farmiloe, Financial SEO Company

Early Payoff Penalties

Know the terms of your loan and don’t be afraid to ask a lot of questions. If possible try to secure a better interest rate by putting money down and find out if there are penalties for paying off the loan early, should you be in a position to do so.

Anna Caldwell, Accredited Debt Relief

Net Present Value of Equipment

Each piece of equipment costs something. You need to figure out if a $100 purchase will make you more than $100 in the future. How much time will it save you? How many more orders will you be able to fulfill if you get one more machine? How much profit are you going to get? Answer these questions and you can figure out if you are making a smart decision.

This can be done by using Net Present Value, or determining how much money you are going to make in the future and subtract the cost of the purchase today from that number. For example, $100 equipment that lets me make 1 more order each month for $10 in profit will be a good purchase if my equipment lasts longer than 10 months ($10*10 = $100 total profit. $100 cost – $100 profit = $0 Net Present Value).

Layton Cox, Marketing Consultant

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. 

Carey Wilbur, Charter Capital

Office Furniture

Startup companies supporting remote workers or in-office employees need comfortable office chairs and technological equipment. For our company, we made the decision to equip all employees with Herman Miller Aeron chairs to support our belief in workplace wellness. Yes, it was our largest purchase ever made. But, we invested in an undervalued element of a workplace so employees could literally and figuratively feel the support. 

Brett Farmiloe, Carpet Cleaning SEO

Heavy Machinery

Given our industry of work, we frequently use several types of heavy machinery. Equipment loans have proved helpful when a water pump used for pigging has completed its useful life and we need to replace it. The key here is to finance equipment that is crucial to your business operation rather than equipment that just makes you “look good.” 

Rex Murphey, Montauk Services

Inflatable Obstacle Course

We see interesting requests come through all the time. It inspires me to see entrepreneurial creativity going on in this country every day. One of the most interesting finance requests I remember seeing was for the purchase of an inflatable obstacle course. This thing was huge, the gentleman applying wishes to set it up as a tourist attraction on his backyard lake. Last time I checked, the business was booming and it had been a massive success.

Ethan Taub, Loanry

New Products for More Market share

We have recently financed the purchase of a new product which we anticipate will enable us to capture more market share in our second largest customer segment. We took into account the projected impact of this product and weighed it against cost before making the decision to pursue an equipment loan. Ultimately, we believe that this investment will be well worth it.

Chris Dunkin, Portable Air


A perfect item to finance at the moment is a large scale and professional work printer. They are the needed item that you don’t want to buy at the moment because of the simple fact the world is moving towards being paperless in a bid to be green and stop global warming. Printers do have a limited lifespan left, so why not invest in financing while you work out how and when your business will go fully paperless so that when the time comes, you can just return it, instead of being lumbered with an out of date piece of equipment

Andrew Roderick, Credit Repair Companies

Dental Equipment

Equipment loans can be extremely helpful when you are trying to get your business off the ground. Using the loan for big ticket items, like the machines we used to create our dental prosthesis, is a smart way to help your business move forward. The loan can also be used for scanners and technological equipment that would otherwise take a business months to save for. 

Henry Babich, Stomadent Dental Laboratory

Laptops and Software

In today’s society, it is important to give the customer the best experience from the start of the sale up to the end. Therefore it is good to invest in quality laptops and software to make the customer more inclined to purchase our product. It is important to use high quality video presentations, and graphical information to better explain to the customer the capacity of our product. People are visually oriented, no matter how little we change our methods and tactics, every little bit counts to ensure that a deal is made at the end of the day.

David Meltzer, East Insurance Group LLC

Lab and Medical Equipment

The basic necessities that businesses need don’t come cheap. It is critical that a startup business be sufficiently capitalized that it can invest the required money to get off the ground. There may be some items, however, that are suitable for leasing or funded through an equipment loan. We have avoided purchasing some expensive lab equipment by entering into leasing agreements with vendors. Ultimately, it comes down to the cost of borrowing versus the opportunity cost of the capital that could be used elsewhere.

Dan Reck, MATClinics


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.


Be Prepared to Share

Be prepared to show lots of information, both personally and on the business. Even the most well thought out startup businesses are risky. Lenders have historical data that shows that most startups don’t make it to year two. A good credit score won’t get you all of the way there. If you can show past, current, and future financial information, budgets and a well laid out business plan, you’ll help to put a lender’s mind at ease.

Carey Wilbur, Charter Capital


Find Someone Who Actually Wants to Help

When researching financing companies for business equipment, search for a company that will give you a dedicated account manager that will work with you to find the best option for your startup. This will ensure that you receive the equipment leasing solution that makes sense for your unique situation. In addition, do what you can to avoid a personal guarantee. If the equipment has the value the salespeople suggest, they should be able to finance it on the back of the equipment value and not based on your personal balance sheet.

Dan Reck, MATClinics


Utilize Your Personal Credit Score

If your brand new business doesn’t have a credit history of its own yet, you can use your personal credit score to qualify for an equipment loan. As with most types of lending, a better credit score usually entails better loan terms.

Denise Gredler, Best Companies Arizona


Develop a Reasonable Revenue Forecast

Equipment leasing is always a viable financing option. Purchasing an expensive piece of equipment might not make sense for your startup. Try to forecast the amount of revenue you will realistically generate before signing on the dotted line. Sometimes it will make more sense to rent the equipment or lease. In an equipment lease, you pay rent to the equipment over an agreed-upon duration of time. At the end of the leasing term, the equipment is returned to the owner if you decide to end the lease.

Rex Murphey, Montauk Services


Create a Rock-Solid Financial Plan

You will need to present this plan to the lender for an assessment of the financial viability of your business. The plan should include the startup’s future growth potential, and projected annual revenue. You should also include how many years you have been in the industry as this demonstrates your understanding of the industry. Lenders are more likely to fund equipment for startups with leaders that have experience in the particular field.

Joe Bailey, My Trading Skills


Learn the New System Fast

Get a good lawyer, a good banker and find out how to play within the new system fast. The money that’s being handed out is flying off the shelves and oversight will be hindsight. Work with people who have proven results in helping clients get financing, especially on a short timeline.

Noah Wisnia, Head of Talent


Be Resourceful and Go Without It

Do you really need it? Can you solve your problem another way? If you take on a few hundred thousand or million, it’s your problem when it doesn’t work out. If you take on a few hundred million or billion, it’s their problem if it doesn’t work out. Since most startups are the former, not latter, I would avoid it and go without. Be resourceful. Find another way or find another idea worth doing that doesn’t require it.

Chris J Snook, Launch Haus


Borrowing Too Much or Too Little Can Break You

Small business owners need to be very careful with the amount they are seeking to borrow. You want to borrow the amount you feel is necessary to accomplish your goal with a reasonable margin of safety to account for the chaos happening in the world right now. Trying to borrow too much will make it harder to get a loan and cost you more in interest. Trying to borrow too little can put you in a dangerous position months from now when you need more money but can’t obtain it.

Adam Sanders, Successful Release


Build Your Startup’s Business Credit

Though it might seem like a no-brainer, the better your business credit, the better the terms you’ll be able to secure when you’re looking to finance essential equipment. After your business has been established as a separate legal entity, you can build credit with financial tools like trade lines and business credit cards. Be sure to manage all forms of business credit wisely, keeping up on all loan payments and knocking out your credit card balances in full each month in order to help maximize your business credit scores. Plus, avoid using too much of your credit lines to help keep your overall credit utilization low.

Sean Messier, Credit Card Insider


Lean on Your Local Community

When seeking financing for equipment, lean on your local community. More often than not, other local businesses would love to help you get that financial boost. Asking for sponsors in your surrounding area will normally generate some sort of financial help and you can always ask those who do help you to spread the word and see if they know anyone else who is also willing to help. 

Alexes Jones, Startup SEO Company


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.

Carey Wilbur, Charter Capital


What Size Companies Do They Support?

If you are a small business owner, make sure you ask “Do you support small and mid-sized businesses?” Some equipment financing companies only prefer working with large enterprises, because they are generally less risky and more profitable. Do your research beforehand to find a company that best fits the size of your business. 

Blake Murphey, American Pipeline Solutions


What’s Their Average Turnaround Time? 

Make sure you are not going to work with a company that will drag their fit and continuously put off deadlines. After meeting, they should commit to evaluating your application within a day, and upon approval, they should have the funds in your account within a few weeks. 

Jonathan Cohen, Generated


What Information Do You Need to Provide?

Ask your financing company upfront what kind of information they need about your company to move forward in the process. This will give you time to collect documents such as profit and loss statements, balance sheets, and bank statements to make sure there are no bottlenecks holding up the process. 

Ryan Nouis, TruPath


Know Who You’re Dealing With

Lots of equipment leasing companies will go on at length about the number of satisfied clients they’ve serviced but will be unable to provide actual concrete references to that effect. Protect yourself and your business by requesting the contact information for a cross-section of their current and former clients. Once the information is provided, contact the names and determine for yourself their level of satisfaction with the company. Don’t be afraid to look up the company name on review sites and other internet sources. Doing thorough research now is preferable to paying through the nose on an equipment lease or loan with unfavorable terms or services.

Blake Taylor, Synergy Business Brokers


Ask About Their Qualifications

You should be asking about their credentials and skills. Ultimately, you should be paying the best people to work with who know exactly what they are doing. Their rate may be reasonable but always dig deeper.

Andrew Roderick, Credit Repair Companies


Be Aware of Financing Limitations

It’s important to make sure you’re aware of any limitations on the financing you’re seeking, including if you’re able to purchase from the vendor of your choice, as not all financing companies allow this. You should also inquire about the repayment options, such as how long they’ll allow you to make the repayment in full, ensuring that this is in your best financial interests.

Anna Barker, LogicalDollar


Understand The Loan Guarantee

It’s important to fully understand the terms of the loan. The most important loan term to understand is the loan guarantee. Some lenders will only use the equipment purchased as collateral. However, some may ask you to secure the loan with other business assets or even with your personal assets.

Axel DeAngelis, NameBounce


Always Ask for Options

Never let anyone convince you that you only have one choice in financing your equipment. There are a variety of plans, leases and loans available for businesses with a variety of needs. Make sure you don’t pick an option that’s apparently “one-size-fits-all.” This will help you make the best choice for your company’s needs with the means you have and avoid spending too much.

Aidymar Berrios, Financial Services SEO Company



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.

What do you consider equipment? By definition, any tangible assets, other than real property or the building in which you work could be considered business equipment. This includes just about everything from heavy equipment to custom or prepackaged software could be financed or leased.

What is equipment financing and leasing?

When you finance you own the asset and provide it as collateral for a loan.

When you lease, the leasing company owns the asset and allows you to use it for a monthly fee. Generally, at the end of the initial term of the lease, the asset ownership converts to you for a nominal fee, usually $1.00. If you choose to lease be sure that you carefully read the document that pertains to ‘equipment ownership’ and what you must do to advise your leasing company of your intent to buy the equipment at the end of the lease term.

Both Equipment Financing and Equipment Leasing accomplish the same thing, they allow you to add the equipment you need to grow your business or simply replace an asset for a fixed monthly expense. In our opinion, financing is much cleaner and safer than leasing. If you want more detail on this just call and we’ll gladly answer your questions.

Let Charter Capital help you connect with the best source of funding for your business.  Call or email us today!


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.

• Documentation Fees – this is a fee most commercial lenders charge for preparing a set of documents. Most lenders will charge between $150 and $200 and sometimes higher due to the complexity of a specific situation. Some commercial brokers double or triple this and keep the difference.

• Inspection Fees – this is a fee for doing a physical inspection of the asset once it is in place in a customer’s facility. It protects the lender and the customer and generally costs between $150 and $200. Some commercial brokers increase this amount and keep the difference.

• Application Fees – only a few companies charge Application Fees and it’s simply a way to make more money.

• Search Fees – if you are financing a piece of equipment that was acquired from a private party seller rather than an equipment vendor or if you have had possession of the asset for more than 15 days a Uniform Commercial Search is generally required to verify the lender’ lien is a priority and not subject to any preexisting liens. The cost of such a search can vary from state to state and on the number of pages in the resulting search.

• Credit Checking Fees – only a few companies charge Credit Checking Fees and it’s simply a way to make more money.

• Success Fees – this is a fee that is negotiated between you and the lease/loan broker and generally represents his fee for finding you a lease or loan. It is generally dependent upon the amount of the asset cost and should normally range from 2% of the equipment cost for transactions over $500k to 5% of the equipment cost for transactions under $500k. Remember these fees are negotiable.

• Commitment Fees – this fee is given to a commercial lease or loan broker or lender to insure that you will accept and complete a lease or loan under a specific set of terms. This is generally accompanied by a Commitment Agreement which is a document that states the amount of the borrowing, the repayment terms, who will guaranty the obligation, and any contingencies. If the broker or lender performs and provides an approval in accordance with those terms and you decide not to proceed with the lease or loan the Commitment Fee will be retained. If you are not provided with an approval as detailed in the Commitment Agreement your fee should be returned. READ THESE DOCUEMTNS CAREFULLY.

• Titling Fees – these fees are usually reserved for the financing of titled vehicles. Amounts depend upon the type of vehicle and the state in which titling takes place

• Processing Fees – only a few companies charge Processing Fees and it’s simply a way to make more money.

• Miscellaneous Fees – which can be almost anything and it’s simply a way to make more money.

When applying for any lease or loan ask the lender to enumerate any and all fees or charges. Remember fees and charges are generally negotiable.

We offer this informational document as our opinion based on over 40 years of experience in the commercial finance industry and suggest that you to use it as a part of your decision making process. As with all important decisions, especially financial decisions, we also suggest that you consider all aspects carefully and consult with your attorney or accountant or other party who is knowledgeable about financial matters when considering entering into a legally binding agreement.


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.

Most commercial lenders will charge a proportional percentage of the full monthly payment (including interest AND principal) that corresponds to the percentage of a month the extra time the funds will remain outstanding. In the example used above the 15 days is one half of a month (30 days) so the lender charges an additional one half payment which not only includes interest but principal as well.

• 36 month loan for $100,000
• At 6% the repayment is $3,042 per month
• 6% interest for 15 days on a $100,000 loan is ¼% or $250.00
• The typical interim rent charged is ½ of a monthly payment or $1,521.00

And that’s an extra $1,271.00 out of your pocket and into the lenders pocket and rather than paying 6% for the extra 15 days you are really paying 36%.

We offer this informational document as our opinion based on over 40 years of experience in the commercial finance industry and suggest that you to use it as a part of your decision making process. As with all important decisions, especially financial decisions, we also suggest that you consider all aspects carefully and consult with your attorney or accountant or other party who is knowledgeable about financial matters when considering entering into a legally binding agreement.


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.

At the end of the initial lease term the customer will either remit a check for the additional $1.00 or other fixed price purchase option and send it with their final payment or inquire what they must do to obtain clear title to the asset and that’s when the BAD NEWS is usually disclosed. In either situation they may find that buried in the fine print are requirements that the customer should have NOTIFIED the Lessor of their intent to exercise their option and that notice should have been made in a very specific way and within a very specific time period. The agreement language usually requires the customer to send a CERTIFIED letter to the Lessor notifying the Lessor of their intent to exercise the option and that letter must be received by the Lessor not less than 90 days and not more than 120 days prior to the expiration of the Lease. Typically this language is ‘hidden’ in one or two separate sections of the lease and only when read in conjunction with each other does it become clear what must be done to exercise the option. If the customer fails to do any of those things exactly as outlined in the lease, the lease automatically renews for an additional 12 months and the customer is legally bound for 12 more payments than they originally contracted for. Assuming the original term of the lease was between 36 and 60 months the customer can end up paying between 26% and 38% of the original asset cost in additional payments. THAT’S IN ADDITION TO ALL THE INTEREST AND PRINCIPAL THE CUSTOMER HAS PAID FOR THE LAST 3 TO 5 YEARS.
We offer this informational document as our opinion based on over 40 years of experience in the commercial finance industry and suggest that you to use it as a part of your decision making process. As with all important decisions, especially financial decisions, we also suggest that you consider all aspects carefully and consult with your attorney or accountant or other party who is knowledgeable about financial matters when considering entering into a legally binding agreement.