Types of Equipment Financing

Types of Equipment Financing

Just like it seems with everything in life, there are many different options available for you if you’re looking for ways to obtain equipment for your business. Choosing the right one can be a very difficult task, which is made even more annoying since you’ve already had to make the difficult decision of what equipment you need now and what can wait. If that’s the situation you’re finding yourself in, learn a little bit more about the many different types of equipment financing available to you. 

Ownership Options

If you’re looking to purchase outright the equipment your business needs, you have several different choices for obtaining the lump sum you’ll need. Whether your business needs a new pizza oven, a new forklift, or just a computer upgrade, you can look to various types of traditional loans to help you out. With these, you’ll have to approach a lender, frequently a bank, and apply for the loan by providing some information on your financial history, as well as a form of collateral, in some cases. If you’re approved, you’ll receive a lump sum with which you can pay for the equipment. Your payments will be for pre-determined amounts regularly and will include interest.

Under this umbrella, you’ll find options from your primary bank, specialized online lenders, third parties, as well as the United States Small Business Administration. Each source offers its benefits, ranging from ease of approval to lower interest rates or higher limits. 

Leasing

Another great option for obtaining your necessary equipment is leasing. This is a fantastic option if the technology your business utilizes is frequently updated, or older equipment is less efficient or rendered obsolete. With equipment leasing, you’re essentially renting what you need. Again, you’ll pay regularly, and you won’t have the benefit of ownership of the equipment at the end of the term. However, if you do fall into one of those rapidly-changing fields, you have the benefit of using modern equipment without having to pay out huge sums every few years to get the newest version.

No matter which route you choose, there is a version of equipment financing out there for you. Making sure that your business is using the right equipment can have a huge impact on your efficiency and safety, so make sure that you spend the time researching not only what equipment you want, but also how best to get it.

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