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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