As a business owner, you have heard the term “vendor financing” of equipment a few times and have a general idea of what you think that means. However, you would like to know for sure because it might be something you would be interested in using as a funding option for your business.
Basically, it is when the vendor, such as an office-supply company, lends the money to a customer to purchase a piece of equipment (new or used) from it similar to a car loan. Another way of looking at it is to think of it as the equivalent of owner financing in the real estate world.
Vendor financing is not equipment leasing, which is where the office-supply company would, basically, own the equipment and “rent” it to you. With vendor financing, you own the equipment when you finish making all the payments.
Vendor financing helps companies that may not be the most financially stable or those just starting out in business, such as startups, to secure financing that is easy, fast and affordable. It also helps provide access to the equipment needed in their business, and, through its use, businesses are able to do what they do best, their business! Also, having access to the equipment needed helps them to stay competitive and grow their business. Additionally, they have comfort in the knowledge that they have a funding source for the future that will work with them for their equipment needs.
Vendor financing programs are usually industry specific, and the vendor becomes an expert in the particular needs of that industry. Some of the most common industries that use it are:
• Water equipment;
• Office products;
• Fitness equipment;
• Commercial vehicles;
• Heavy equipment;
• Cloud software;
• Design software;
• Land surveying equipment;
• Many others.
Some other benefits usually include:
• Only need to be in business for a few months
• Fast Processing
• Unsecured programs
• Terms of 3 to 8 months
• Reasonable rates
No collateral is required for merchant cash advances. Specializing in alternative financing, not traditional loans.
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