Monday, December 27, 2010

3 Equipment Financing Options That You Can Use For Your Business

By Danica Reynes

Various options, such as funds from private finance companies, bank loans and government loans, are some of the more useful equipment financing options for one's business.

Businesses of all sizes and categories will benefit from equipment financing, from the smallest beauty salon to the largest manufacturer. The enterprises are granted a financial source with which they can use to purchase equipment that is deemed necessary for their business to function. With equipment finance, you will get tax benefits, a smoother and stronger cash flow and less debt. If you are considering equipment finance, make sure that you are well aware of the contract details and the obligations involved. An equipment finance can be secured from different sources and depending on the special needs and situations of your business, you can choose the one that suits you the most.

Funds from various financial companies

Most of the equipment financing is managed by the equipment manufacturers themselves through their close association with private finance companies. These private finance companies provide loan and lease applications to the manufacturer's customers. There is one advantage of the equipment funding obtained from private finance companies. The agreement includes special programs like payment free period or reduced interest rates given for the equipment manufacturer's clients. Additionally, because these private groups specialize in equipment financing, they are able to offer advice regarding the different leasing or borrowing options available. They may help you to determine whether the quality of the used equipment can qualify for the loan. The quality of the equipment is important not only for you as the user, but also for the lender because, in the event that you default on the borrowing arrangement, the lender will have to sell the equipment to recover the amount loaned you. The value of the machinery should cover the loan or else the lender has insufficient collateral.

Equipment financing by banks

Most large banks provide several business financing options. Though the lending goals of both the banks and the private agencies are basically the same, banks grant the loan only if the borrower qualifies for the loan and they ignore the place where the equipment is bought from. You can make inquiry about interest rates in different banks located in your area for comparing and choosing the best among them to improve your business. It makes sense that local banks would have better knowledge of the local business environment. Turn to them for information on what equipment to purchase or where the best bargains are on used equipment.

Loans obtained from the government

Some government agencies may offer equipment financing for businesses. You might have to submit requirements and financial projections that will prove that the additional equipment will help improve the business's operations and financial standing. In some cases, if you are able to show that the equipment purchase will allow you to retain employees or create more job opportunities, you may be able to qualify for loans with lower interest rates through your local economic development agency.

Investment in plant and machinery can show up in the bottom line. If you can choose the right agency to get the equipment finance, you can easily buy that equipment without draining your funds.

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1 comment:

home buyer said...

This is a great site and contains fantastic contents. Thanks for sharing this to us.

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