Starting your own business is not an easy feat. You will need a lot of patience, a lot of filled paperwork, a great idea, and a lot of money. Of course, you will also need equipment for whatever you want to do or produce. Equipment means that you will need even more funds, which can quickly get overwhelming for your budget. Luckily, there are equipment finance options you can choose to make it all a bit easier.
Read on to find out everything about equipment finance and why it is a great choice for startup businesses.
What Is Equipment Finance?
Equipment finance allows you to work with a lender in order to purchase the equipment you need to start your business. The amount of money you get is equal to the value of the equipment you want to buy. The interest is often quite low, which is why this type of financing is popular in the first place.
How Does Equipment Finance Work?
When you get an equipment loan and buy what you need, you own the equipment outright. Additionally, the equipment serves as collateral for the loan, which means that the lender can seize it if you fail to return the loan. You will not have to use any other assets as collateral, and that’s a great offer.
Why Is Equipment Finance a Good Option for You?
Equipment loans have many advantages, especially for startups and small businesses.
Firstly, you don’t need to have a perfect credit score or huge income to get this type of loan. The reason for this is a fact that we mentioned above: the equipment is the collateral for the loan. In such a climate, lenders can give loans to clients who are a bit more high-risk than ordinary loans would allow.
Secondly, getting equipment loans for small businesses and startups means you will have more money for other aspects of running your business. You will be able to pay for marketing, additional resources, employees, and so on, as you will not have to pay for the equipment out of your own pocket.
Finally, getting an equipment loan is a rather quick process. It requires much less paperwork than ordinary loans, and you can get one within a single day. Of course, it also depends on the amount of money you’re getting and who the lender is. But, all in all, the process is quite quick.
What Is Equipment Leasing Finance?
Another option similar to equipment finance is equipment leasing. As opposed to equipment loans, equipment leases allow you to rent equipment rather than buy it. An equipment loan means you own the equipment long after you’ve paid off the loan. You can continue to use it or sell it, but you own it fully.
Conversely, once you pay off the lease for your equipment, you either return it or upgrade to something better. You can also upgrade even if you haven’t paid off the lease yet.
Whether you will choose lease or equipment finance depends on the type of business you own and the type of equipment you need. It also depends on your financial situation. A lease often requires lower monthly payments. However, buying the equipment after the lease is over is also more expensive than getting an equipment loan.
As you have read, knowing the different ways of how to finance equipment is rather important when you are starting a business. Equipment finance is a great way to purchase everything you need while still having enough money left to actually run your business.
There are many commercial and farm equipment loans you can opt for when looking for the best equipment finance Australia has to offer. So, don’t waste any more time. Get your loan, and start your business today.