How to Get Started with Equipment Financing
There are many costs associated with starting a business, but none can seem more expensive as purchasing new equipment. When faced with obtaining the means to complete the job at hand, it often appears that buying the necessary machinery outright is the best answer. Fortunately there is a better way. Equipment financing offers a different approach to completing your mechanical inventory with several benefits.
There are many reasons to look into financing your equipment. First and foremost it’s often cheaper than obtaining a loan. Starting a business means saving costs as much as possible, and many financing plans will include maintenance as part of the package, freeing capitol for use elsewhere. In addition, when faced with a new job that needs a specific and expensive piece of machinery, you can finance it for the duration of your work contract and return it when the work is completed, instead of buying it and letting it sit in a warehouse while you continue to make payments.
Know Your Business
No one knows your business like you do. It’s just as important that your equipment financing partner understands it as well. A company that knows the ins and outs of your field will take into account market trends and payment schedules, allowing you to formulate a contract that works to both of your benefits. At times these companies can even advise on what equipment is necessary for certain jobs, or at what point in the job it would be best to finance specialized machines.
A Credit to Your Company
The requirements for equipment financing differs from company to company, but as with loans, many institutions look to your business’ credit first to determine if you qualify. Since most new business have no initial credit history, often times the owners are looked at. However, it is important to note that many companies look past credit history to your experience in the field as well as collateral and expected yearly income.
Understand the Agreement
Before finalizing with any company, take some time to examine the contract to ensure both sides fully understand what payments need to be made, and when. Maintenance plays a key factor, but there are also additional costs like taxes and insurance. When a piece of equipment has been in your care for a while, you might wish to upgrade or improve it in particular ways which might void your contract. Also it’s important to pay attention to the end of the agreement, and what charges or additional work it required before the equipment’s return. Once you understand all of the ins and outs of equipment financing, you can work towards making your business the success you want it to be.