An equipment loan is a form of financing that enables small business owners to get the equipment and machinery they need to grow their companies when they are short on cash. The equipment loan landscape is vast with several highly specialized lenders serving the market. While some lenders exist solely to finance construction companies, others only service agricultural businesses, and so on.
Uses of equipment loans
Businesses across all industries can use equipment loans. Some examples of these business categories include Construction companies, Farming businesses, Auto body shops, Shipping companies, Healthcare providers, Restaurants, Breweries, Manufacturers, IT companies, and Creative agencies.
Factors to consider
Like any other funding option, one of the major challenges faced by businesses is how to get equipment loans. However, before settling for a lender, there are some factors to consider when shopping for any kind of small business financing vehicle, including equipment loans. These factors include the lender’s specialty, size of the loan, qualifications needed by the borrower, cost of borrowing – interest rates, speed of funding, and loan terms.
Once the factors highlighted above have been carefully considered, the next step will be to apply for the loan. While each lender has an application process that might be slightly different from others, below are the basic requirements to be fulfilled to qualify for an equipment loan.
- Gather all necessary business information
- Ensure credit is in good shape
- Collect financial statements
- Create a detailed plan
- Shop equipment loan lenders
Like any other form of financing, equipment loans have their pros and cons. Consequently, intending borrowers are usually advised to look around for other available options, objectively compare their features and benefits, and subsequently decide on the funding source that best suits their business needs.