Business Equipment Financing Helps in Hard Times

Buying Equipment for Your Business

Many companies are in need of capital improvements to maintain or expand their business but simply do not have the capital to do so with. Companies have a number of different needs and, particularly when they are first starting out, limited capital to deploy to obtain this needed equipment. As such, they often turn to business equipment financing to fund their capital needs.

Lenders to small businesses that need business equipment financing will typically work with the staff of the business to provide to them the financing structure that works best with existing loans. Small businesses often have loan covenants on mortgages and lines of credit and business equipment financing deals often have to be structured to fit along with these loans. Having a lender that will work with you is invaluable in business.

Common forms of structuring for simple purchases of equipment include capital leases, capital lease buybacks, notes payable agreements, amongst other loan types. Generally speaking, capital equipment financing arrangements are typically for five years or less in length.

For borrowers who may have bad credit, their are equipment financing bad credit loans available. often these equipment financing bad credit loans have certain unique characteristics associated with them. Options include loans that have a lien on the capital equipment being purchases, other collateral being put on the equipment financing agreement, or personal guarantees by related entities. Personal guarantees will hold the owner or management liable in case of default. These bad credit financing arrangements often have higher interest rates associated with them than other loan types to cover for the higher lending risk. In certain situations these terms can become quite punitive and therefore good credit should be maintained by companies, when possible.

Many financing lenders will perform an overall assessment of your business when you are applying for an equipment financing arrangement, depending on the size of the loan of course. For larger loans many lenders will require audited or reviewed financial statements that can be used to assess the ability of the borrower to pay back the loan.

Business that borrow are leveraging their capital to expand their business. This can provide management with the ability to pursue expansion that can yield significant profits over time. Business financing is one way that businesses do so. Equipment financing can be structured in a variety of methods and is available for business that have good credit or bad credit. An overall assessment of your credit worthiness is often performed and an appropriate loan is structured to coincide with your present situation.