Best Equipment Financing Companies and How to get Equipment Loan.
Best Equipment Financing Companies: Many businesses need equipment and machinery to run successfully. As a small business owner, you know just how important it can be to have the right equipment your company needs to operate on a daily basis.
However, depending upon your business’ equipment needs, you may not have the funds to pay for new purchases, upgrades, or replacements outright. Even if you have the available funds to pay, tying up your company’s cash flow with a pricey equipment purchase may not be really the best move financially for the overall state of your company. For this reason, many businesses seek out equipment financing for larger purchases rather than paying for them in cash.
What Is an Equipment Loan?
Equipment loans are forms of small business funding which small business owners can use to purchase any kind of equipment or machinery that their company needs to operate at a profitable level. If your business requires office computers, printers, industrial appliances, company cars, or other advanced machinery, you can take out a loan to fund your company’s equipment.
Perhaps one of the most attractive features of financing equipment is the fact that the equipment itself can often serve as funding collateral. This may be good for both the borrower and the lender.
From the point of view of a creditor, machinery financing poses less risk because the lender has a valuable asset that can be recovered and resold if a company fails to repay the loan as agreed. As a corporate borrower, it is good not to have the need to set up extra collateral to protect the loan other than the actual equipment being funded.
5 Best Equipment Financing Companies
Credibility Capital gives short- and long-term loans to applicants who have a good to excellent credit and have been in business for not less than 24 months. If you are considering this equipment loan, it’s pertinent to note that they do charge an upfront origination fee, so you should include that fee when comparing lenders.
APR Range:8.00% to 25.00%
Loan Terms: Not provided
Loan Amounts:$10,000 to $350,000
Usual Deposit Time: Typically, 7 days
Minimum Credit Score: Not provided
Currency Capital specializes in equipment financing for businesses of various sizes. Customers who are interested in an equipment financing loan must contact the company to receive individualized information about rates, terms, and eligibility.
APR Range:6.00% to 24.00%
Loan Terms:6 – 84 months
Loan Amounts:$5,000 to $2 million
Usual Deposit Time: 24 hours to 2 weeks
Origination Fee: Varies
Minimum Credit Score:585
Funding Circle is a popular online lender that provides small business loans that can be used for a variety of reasons, including staffing, working capital, and purchasing equipment. Funding Circle offers an easy online application process and provide personalized rates in as little as 10 mins.
Fixed APR Range:4.99% or higher, based on your credit
Loan Terms:6 – 60 months
Loan Amounts:$25,000 to $500,000
Usual Deposit Time: Funding is as little as 5 days
Origination Fee:3.49% – 6.99%
Minimum Credit Score: Not provided
OnDeck in an online lender that offers short- and long-term loans as well as business lines of credit. Their application process is easy and borrowers with average credit can qualify.
APR Range: As low as 9.99%
Loan Terms:3 – 12 months for shot term loans, and 15 – 36 months for long term loans
Loan Amounts: Up to $500,000
Usual Deposit Time: As soon as 1 to 2 business days
Origination Fee:0% – 4%
Minimum Credit Score:600
Crest Capital offers a number of financing options including equipment financing, vehicle financing, and software financing. They pride themselves on being a “no-hassle” financer with fast approvals and low rates. Plus, Crest Capital will also fund loans for used and privately sold equipment.
Quick Approval –Equipment loans are generally approved (or denied) rather quickly. One way of speeding up the process is to consider applying with a nontraditional lender such as Kabbage for your small business line of credit. Kabbage is an online lender that gives quick funds for multiple purposes including inventory, equipment upgrades and marketing efforts. Kabbage also considers your request in a matter of minutes. This means you can have the additional capital you need even faster, so you can purchase or replace the equipment you need.
Tax Deductible – You muight be able to deduct your equipment loan monthly payments as an “operating expense.” Check with your lender as well as a business tax attorney to be very sure.
More Money In Your Pocket – Keep cash-on-hand for other purchases you might need to run your business. Imagine having one of your delivery trucks break down and needs to be replaced. Or even the oven in your restaurant is on the fritz. Instead of spending money from your business revenues to pay for these very high-ticket items, equipment loans can be used to replace or repair this very expensive – and vital – a piece of equipment.
Flexible Payment Schedule –Depending on the lender who you secure your business equipment loans, you might be able to take advantage of flexible payment options. This comes in handy as you are working to replace the equipment, continue running your business and also making payments on your business equipment loans. Some lenders might offer you the option of choosing monthly, seasonal, quarterly, biannual or even yearly payments depending on the type of loan you secure. Note: you might also be able to take advantage of a 90-day deferment on repayment of your equipment loan. Again, work with your lender on your equipment loans to find out what works best for your business needs.
Approximately 25% of “Soft Costs” Covered –Soft costs include things as fees, delivery charges and freight charges. Again, each lender is different, so be sure to do your research to know exactly what charges are applicable to the loan and which charges you will be responsible for covering.
What are the Downsides to Equipment Financing?
One of the downsides is the loan term in relation to the longevity of the equipment. Sometimes, particularly when borrowers enter into longer repayment terms, the equipment can break and depreciate over the life of the loan, leaving you paying for repairs or replacements while still making payments on the original equipment.
Equipment Financing vs Equipment Leasing: What’s the Difference?
When thinking equipment financing, equipment leasing also frequently comes in. Both options allow business owners to acquire the equipment they need when they don’t have the working capital to buy it themselves. However, there are some big differences that may make one option better than the other given your unique situation.
Equipment financing, like any other small business loan, is a lump sum cash advance that can be used in making a purchase. It comes with fixed payments and terms, and at the end of the repayment term, you will own the equipment outright. With competitive equipment financing rates, this can be a much more affordable option, especially when it comes to equipment that you plan to keep long term.
Equipment leasing is similar to leasing a vehicle: at the end of your lease you do not own the equipment. Instead, you must continue the lease or make arrangements to purchase the equipment, though that will likely be more expensive than if you had bought the equipment in the first place.
However, in some cases, equipment financing may make more sense. For example, if you have poor credit, you may find that no credit check equipment financing options carry high interest rates and make leasing more affordable. Or if you plan to replace the equipment in question every few years, leasing may be a better option.
Bottom Line: Is Equipment Financing Right for Your Small Business?
Business equipment financing can help you buy the equipment that is essential to your day-to-day operations—even if you do not have the cash on hand. Business owners should consider equipment financing in addition to other short-term lending options, like loans or a business line of credit, as they review their options. Which ever way, keep in mind that equipment financing isn’t always right, and some businesses owners may find that leasing their equipment may make more sense.