Financing Equipment: 8 Tips For Business Owners
From a computer mouse to a forklift or a crane, your business relies on equipment to get the job done.
Too many business owners underestimate their equipment needs, not realising that even small things can be covered by equipment finance.
What should you know about financing equipment? How do you get approved?
Here’s our top tips for financing equipment in business.
Make Sure You Have An ABN
Sure, you may be waiting on some equipment to get your business started. But if you can get established with a one or two year record of trading, or at least being registered for that period of time, you’ll be more likely to score the financing you need.
Set Aside Some Capital
It’s ideal to have cash set aside in case of any cashflow issues, particularly in the early stages of business. Those loan payments won’t wait long, but it could be a matter of months before you finally see revenue. If you have other funds set aside to keep you afloat during any funding gaps that may arise, you’ll be in good shape.
Clean Up Your Credit
For the fastest and surest equipment finance approval, make sure your credit is in good shape – keep on top of those credit cards and debts.
Have a Backup Plan in Case of the Worst
The backing of a large asset, such as your home, will speed up your approval process. If the worst should happen and you fall into debt, the loan provider will be confident that you could clear your equipment costs with the help of something like equity in your home.
Prove You Have Work (And Income)
A potential lender will want an idea of your current cash flow before letting you borrow funds. It’s a good idea for both you and your bank to know where your money is coming from and what your budget is.
The more experience you have in your industry, the easier it is to get funding. When you’ve worked with certain equipment for years, you know exactly what equipment you need and how much of it. You’re also experienced in maximising income using that equipment.
Banks and lenders are much more willing to loan you the necessary funds if you’ve already proven that you know how to use them.
Share the Load
It’s wise to consider spreading your equipment debt across a few different lenders. This will help you take advantage of competitive rates and protect your assets.
Get Help With Weighing Up Your Options
The three main types of loan structures common in financing business equipment include:
– Finance lease agreement
– Secured equipment loan
– Hire purchase
To determine which one is right for your needs and to get the best possible deal from the widest range of lenders, get advice from expert equipment finance brokers. Contact Funding Options for a no obligations discussion about your needs – our service comes at no cost to you.
– Dom Cassisi, Managing Director