When it comes to the core equipment your business needs to do its work, there’s no making do with another option until you raise funds because your operation grinds to a halt if it doesn’t have the tools needed to finish each job. It doesn’t matter if you’re providing a service, building consumer goods, or supplying parts to another business, there are just some tools you absolutely need. When one of them breaks down, finding fast financing is the key to getting back on track, so the options that serve you well as a startup wind up not being that great for short-term equipment demand.
Traditional Financing Options
Equipment financing comes in many tiers, depending on the value of the equipment and the program you’re using. For companies buying a large starting layout, long terms on a bulk loan that covers everything through the SBA or lender-specific programs can provide terms of up to 25 years in some cases. Individual pieces of equipment are typically financed through loan programs that are in the 5-7 year range instead, and since they are usually for smaller amounts than a startup equipment loan, it’s easier to qualify. That still means waiting for a couple weeks to a month for approval when you need a new dry cleaning conveyor, though.
Alternative Equipment Financing
Alternative financing options and leases are a great way to get fast approval when you need to replace a machine as quickly as possible, but they are a little more expensive than traditional loans. If the issue is immediate cash flow, though, they are usually the best choice because many equipment financing deals with low or no down payment can be paid early without any penalty. Higher interest rates only cost more over the long term, so the cost of the loan needs to be balanced against the income it lets you generate. If you get back to work in a day instead of a week, how much is that worth?