When you’re running a business, you are bound to require equipment and machinery to ensure smooth performance of work. However, when you’re running small and medium-size enterprises or startups, it is possible to face the issue of fund availability while purchasing new equipment, replacements or upgrades.
This poses a major threat to your operations and can temporarily halt production and affect your cash inflow. This is why, to cope with this issue, we are going to talk about equipment financing and equipment finance lenders.
Equipment loans and their impact on small and medium-size businesses
What exactly is Equipment Financing?
Imagine a time when your business is performing exceedingly well and there are numerous avenues for expanding your operations. In a fleeting moment like this, you will require new equipment and the most convenient way to get this without affecting the working capital, cash flow and jeopardising the financial health of the company by investing in capital assets immediately, is to look for a Line of Credit for equipment financing.
Business equipment loans serve a win-win situation for both borrowers and lenders
It is noticed that business owners are often in an advantageous position when they avail business equipment loans, due to the fact that the asset so financed can serve as a collateral to the loan itself. As a result, additional equipment need not be secured against the loan.
It is also beneficial from a lender’s viewpoint because the equipment so financed serves as collateral. It means that during the times when businesses face cash crunch or repayment issues, the equipment is collected by the lender and cash is realised.
Alternative lenders are the ultimate go-to for financing equipment
As a business owner, one of the major challenges is to qualify for equipment loans. Traditional Lending Institutions like Banks, Credit Institutions, etc have a very strict policy to qualifying for a loan.
In another case, online alternative lenders have a less strict policy for loan approval. They make capital available for a wider variety of borrowers with a lower minimum credit score rating, lower period of time in business than the traditional lenders and even doesn’t require a formal business plan. This process is far less time consuming and provides more guarantee of you receiving the money within a given time frame. However, the interest rates can be higher when availed from Alternative Lenders but are most reliable during times of extreme urgency.
Online Alternative Lenders are the best option during the heat of the moment.
Choosing the best equipment finance loan for your desired needs
When it comes down to choosing the best alternatives for your equipment financing, we need to take into consideration certain factors step by step as follows :
Understanding Credit Score and Identifying the loans you’re likely to qualify for
As we know, the determining factor for chances of loan approval is strictly based on your credit score and the past period of time you’re in business and your repayment history. The most crucial part about a credit score is maintaining an all-time high with consistency. The credit score usually falls between 0-1200, with an average score ranging between 500-600 and an excellent score between 900-1200. The higher the credit score, the lower the interest rates, loan term and better chances of approval will be.
Evaluating affordability of a loan
From the borrower’s viewpoint, the most significant factor while choosing the best equipment finance loan is to understand its degree of affordability.
It is important to evaluate and compare the cost of each loan alternatives. For accurate comparison of cost of each loan, it is advisable to compare the total cost of financing which includes interest rates, application fee, loan term and collateral.
Reaping the benefit of loan calculator
Employing a business calculator to evaluate and compare various loan alternatives and choosing the best equipment loan option is a wise decision. This tool can measure approximately the total cost of the borrowing as you input the following information:
1. The interest rate.
2. Loan term.
3. Additional Fee (Origination fee, Application fee)
After all the above are evaluated, now you can best decide which equipment finance Alternative to avail.
Better credit score = Better guarantee of loan approval.
Hubbe – Your ideal destination for swift and easy business loans
Expand, upgrade and take your business to new heights with Hubbe.
Here, we offer unsecured equipment loans at affordable repayments. Our dedicated team of lenders will present you with the best fund required and assist you in various business concerns. Financing equipment is now easier as we offer Same-Day-Approval and funds in your hand within as little as 24 hours.
Feel free to contact us for any assistance and consultation!