04/22/15

What Is An Equipment Loan?

If you’re looking for a piece of equipment that’s going to boost your companies revenue, but you don’t have the money to buy it, life can get frustrating. Fortunately, there’s equipment loans.

What Is An Equipment Loan?

Business equipment loans help business owners acquire equipment that would normally be too expensive to buy with cash. An equipment loan is a great way for companies that want to grow their revenues with a certain tool or piece of machinery. Most of the time, the immediate ROI from the equipment pays for the loan earlier than expected, making it an awesome financing option. When compared to an unsecured loan, an equipment loan is less of a risk for both borrower and bank.

Because every industry has it’s own type of equipment, the types of equipment loans are diverse. For example, some lenders specialize in financing only one type of equipment. In the construction industry, there are lenders that offer equipment loans only for heavy machinery.  In agriculture, there are equipment lenders that specifically help small farmers. For nearly every type of equipment you can think of (from commercial sewing machines to computers) there’s going to be a lender that finances that specific equipment.

A business equipment loan is very similar to an auto loan, where the purchased item itself acts as collateral. Because of this, qualifying for an equipment loan is relatively easy. Nevertheless, lenders will still carefully take into account your credit score, years in business, cash flow and other factors. In the case that you default on the loan, the bank is able to repossess the equipment – just as they would with an auto loan.

Let’s take a look at the pro’s and con’s of an equipment loan.

Benefits Of An Equipment Loans

Drawbacks

On average, equipment loan approval takes 1 to 3 months, and paying off the balance typically takes 3 to 6 years, with interest rates of 8% to 25%. Again, depending on the lender’s industry expertise, the terms and rates may vary.

There’s a lot of different options out there, make sure you compare both banks and alternative financing options.

Lendio’s mission is to fuel your American Dream by making small business loans simple through options, speed, and trust. Whether you are looking for an equipment loan or a startup loan, Lendio offers hundreds of different loan products from a variety of lenders. Find out which business loan is best for you.

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About the author

Erik Larson
Erik Larson frequently writes for Lendio about SEO, Digital Marketing, Social Media Marketing, Business Loans, and whatever else strikes his fancy. He can be found on Google+ and Twitter.

Comments

  1. I am in need of a vehicle, canopy, and two folding tables and a comfortable chair. I like to do art and craft shows. Creative woodworking is what I do to promote caring for our forests… Thank you kindly, Robert

    • Hey Robert,

      That sounds like a really great business! You can to get started with Lendio, and we’ll see what options you have! Thanks!

      Erik

  2. Our enterprise called MUSAG DEVELOPMENT CORP , A nEW jERSEY cORPORATION ESTABLISHED IN fEB. 1984. Weare lokking for equipment loans fro $100,000 to 33000,000. The equipment are usable universally ,such as trucks, that have values even after ten years if maintained properly

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