No matter what industry your business is in, you need the right tools for the job. For a freelance writer or a CPA, you may just need a computer. However, it’s likely your business requires something heavier—a forklift, a food truck, a 3D printer, or even an expensive point-of-sale software system for a retail store.
Equipment financing is how you can pay for almost any equipment your business needs without having to buy it all up front. Equipment financing involves applying for a loan so that you can buy new or used equipment for your business. Because equipment can get prohibitively expensive depending on your field of work, the amount of these loans span in range from $5,000 to $5 million.
The equipment purchased with the loan serves as collateral, so the loans are approved extremely quickly—sometimes as fast as 24 hours. The repayment period is usually between 1 and 5 years, typically based on the lifespan of the equipment. Interest rates vary on a range of factors, but they can be as low as 7.5%.
These lenders are aware that your business probably doesn’t have the liquid capital to put a big down payment on your new tools, which helps you focus spending on other ways to expand your company. Equipment financing is how small businesses can start using the necessary machinery of work right away without being burdened by the equipment’s heavy cost. You can have the tools work for you before they are even fully paid for.