by Gerri Detweiler
If you need to purchase business equipment, consider equipment financing. Business equipment is a pretty broad term but these loans cover equipment ranging from an espresso machine for a coffee shop to specialized machinery for manufacturing. Usually the equipment vendors work with lenders for financing with the APR ranging from 8-25% depending on your credit score, your industry and the resale value of the equipment. You can either lease the equipment, buy the equipment with a loan, or do a sale-and-leaseback transaction (sell the equipment to a lender for some cash upfront and lease the equipment back).
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What You Need to Know About Equipment Financing
|Relatively low APR||Can require high down payment|
|Predictable monthly payments||Requires strong credit for good terms|
|Helps build business credit||Financed equipment can become outdated, but you are stuck with it at the end of your payment term.|
|Equipment serves as strong collateral|
Best Uses for Equipment Financing:
- Businesses in need of equipment
- Businesses in need of working capital that have equipment
Overall, equipment financing is fairly accessible to business owners as the collateral is pretty strong. If you intend to own the equipment for a long time, shop for financing partners. It can be your bank, alternative lenders, lenders who specialize in equipment financing or lenders who work with the vendor. Find the lowest cost option with best terms. You can save a lot of money on this.
Equipment Financing Offers
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