You might need to search for business loans for equipment that can help you finance capital investments.
It can be challenging—if not downright impossible—to pay for equipment outright with cash, as machinery can be costly.
If you find yourself in need of commercial equipment financing, you’ll likely find many different lenders you could choose. But, before you select the best lending company, you should understand all that goes into these types of loans.Apply For An Equipment Loan!
What Is A Business Equipment Loan?
Business loans for equipment help companies buy machinery without shelling out the money upfront.
Different lending companies will have different restrictions for:
- how to use the heavy equipment financing
- to whom they will lend the money
The total equipment loan amount will be the same as the final price of the piece of machinery your business is purchasing. The terms of the loan and the interest rate will depend on several factors (like your credit score).
Fortunately, the equipment itself will be the collateral for the loan itself, so you shouldn’t have to put up other assets at risk to secure the loan.
What Kind Of Equipment Can I Finance?
There are many different pieces of machinery that you can finance with business loans for equipment, including:
- Commercial vehicles
- HVAC equipment or solar panels
- Commercial food machinery such as freezers and ovens
- Hardware and software for payment processing
- Heavy machinery such as forklifts, backhoes, or conveyor belts
- Office fixtures and furniture
- And many more things
Equipment Financing Pros And Cons
Of course, there are some pros and cons to taking business loans for equipment.
- Often, this financing option can offer lower interest rates.
- The business owner will own whatever equipment they’re financing (compared to leasing).
- The interest paid is tax-deductible, plus the business owner can write off its depreciation.
Machinery can be pretty expensive; that’s why small business equipment loans are a great option.
- The equipment may become outdated by the time you pay off the loan.
- They may require a substantial down payment.
- To qualify, small business owners may need a good credit score and credit history.
How To Get An Equipment Loan
Getting an equipment loan is a straightforward process. Here are the steps you should take to do so:
- Make an equipment budget
- Find a lender that fits your needs by analyzing different equipment financing companies.
- Fill out an online or in-person application.
- Provide specific details on the equipment you want to finance. This can include the company you’re purchasing it from.
- Provide any supporting documentation the lender requires to secure the loan.
- Provide proof of funds for the down payment.
- Wait for the financing decision.
- Buy the equipment.
Camino Financial has an easy application process. We won’t ask for a down payment or for information about the equipment.
Equipment Financing Requirements
Different lenders will have different requirements for giving out business loans for equipment.
For example, they will want to see bank statements to review your cash flow. Some will even ask you to provide supporting documentation such as financial reports.
Many lenders will want the borrower to have a good credit score and credit history, both personal and business.
Keep in mind that there are other basic loan requirements, such as a set number of years in business and a minimum amount of annual revenue.
Some lenders may ask you to submit a business plan, which could include:
- a detailed description of your business
- its current state
- the plans for the future
- how the equipment you’re financing would help in that regard
Fortunately, there are lenders with minimal requirements, like Camino Financial.
You only need to have been 9 months in business, a minimum annual revenue of $30,000. Plus, we won’t ask for a business plan and you can apply with an ITIN if you don’t have an SSN.
Keep reading: How To Do A Plaid Bank VerificationApply With Camino Financial
When Should You Get Business Loans For Equipment?
There are many reasons you might want to apply for business loans for equipment. Some include:
- Need to replace aging equipment.
- Want to expand your operation and need equipment to do so.
- Want to transfer old paper documents and processes to digital formats, so you purchase dedicated software.
- You are a startup that needs to outfit a new office.
In these situations, getting equipment financing could be a great alternative. With a loan, you won’t have to burn through available cash on hand.
Discover the best computer for small business owners.
Top 3 Equipment Financing Companies
Here are the best equipment financing options at your disposal:
Camino Financial offers some of the best small business loans on the market. With us, you can get equipment loans up to $400,000 with annual interest rates from 12.00% to 24.75% and 24 to 60 months to pay.
You can use a CF loan to purchase equipment or machinery.
We provide instant online quotes that have no impact on your credit score.
Here are our minimal requirements:
- Have been operating for at least nine months
- Generate sales of $2,500 a month
- You don’t need a lengthy credit history or any credit history at all
- We also accept ITINs instead of a Social Security number and provide favorable repayment terms and low-interest rates.
If you need capital to purchase equipment, we’re your best option:Get Approved For A Loan Today
Small Business Administration (SBA)
The Small Business Administration provides the SBA 7(a) and SBA 504 programs that could be great business loans for equipment.
The 7(a) program offers loans up to $5 million, with interest rates as low as 5.50% currently. The repayment terms of an SBA loan can be as long as 25 years, but most are around 10 years.
The 504 program has a higher loan limit of $5.5 million, but the interest rates are a little higher, around 10%.
Though these equipment loans do take a while to apply for and process, plus their requirements are very stringent and hard-to-meet. You’ll also need an excellent credit score.
You can apply for this equipment financing option with a bank or credit union.
This bank offers equipment financing starting as low as $5,000 and all the way up to $500,000. In addition, they offer repayment terms of six through 72 months, with interest rates starting around 5.5%.
They do require a minimum credit score of 620, though.
How To Choose A Business Loan For Equipment
Before you get business loans for equipment, you should take into consideration a few factors, like:
- Down payment: Do you have enough money to afford this payment, which could be up to 20% of the purchase price?
- Needs: Does your company need this equipment now, or can you wait to buy it until you save up the money to pay in cash?
- Usable life: How long will the piece of equipment you’re financing last? If the equipment’s expected lifespan is only equal to or less than the length of the loan, other options might be more feasible.
- Timeline: How quickly do you need the financing? Some lenders will fund loans rapidly, while others have a much more drawn-out process.
Equipment Grants For Small Businesses
Grants are like loans because you receive a set amount of money upfront. The difference is that you don’t have to pay them back.
It’s not hard to find government and private institution grants. Actually, there are many out there. You can use the site grants.gov to find one that suits your business needs.
Even though you might not find specific equipment grants for small businesses, there are still many of them that you can use to buy machinery.
There are many programs designed to help minorities. Find here the top business grants for minorities.
Business loans for equipment aren’t the only option to help your company get the necessary equipment. In some cases, some could opt for equipment leasing.
With equipment leasing, you’ll be renting the equipment instead of purchasing it outright. So it works a lot like leasing a personal vehicle.
You’ll receive the equipment so you can use it. Then, when the equipment lease term ends, you’ll give the equipment back to the company from whom you’ve leased it.
Then, you might have the option of purchasing that exact piece of equipment or starting a new lease.
Equipment leasing might be beneficial if the equipment you need has a short lifespan or if you may only need it for a relatively short period.
Leasing could also save you money, as it can be cheaper on a short-term basis.
Ready To Purchase The Equipment You Need?
It can be quite expensive to buy equipment and machinery. That’s why many small business owners look to business loans for equipment. These loan products can be a great way to get you the equipment you need now while allowing you to pay for it later.
You can use Camino Financial offers loans for equipment financing.
Our motto, “No Business Left Behind,” is what inspires us to provide great lending products and educational resources.
Request a quote for a business loan today so you can get the equipment your business needs.Apply now!
What does an equipment loan cover?
Equipment loans cover the total purchase price of a piece of machinery for your business.
How does equipment financing work?
You will get a loan for the purchase price amount of the equipment you need. You’ll make a down payment upfront and then make monthly installments to cover the rest.
How long can you finance equipment?
Most lenders will have repayment periods of 1 to 25 years.
Can I use Section 179 tax deduction for equipment financing?
Yes, you can use Section 179 to take a tax deduction for business equipment financing.
How do you qualify for equipment financing?
Many lenders will take a look at your credit score and history, the time you’ve been in business, your annual revenue, and your official business plan.
Does the SBA do equipment loans?
The SBA offers many loan programs. You can use most of them for equipment financing.