What is an Equipment Loan?
Often businesses need to buy, replace, repair, or upgrade different types of equipment for processing, production, or manufacturing their products. Equipment loans are the best option for the purchase of commercial equipment.
Devices may include medical and dental medical equipment, furniture, tables and chairs, linens and catering, telephone systems, computer monitors, printers, photocopiers, furnishings, appliances, vehicles, and lots more.
For example, if your business exists in the cyber-security domain, you need capital for the new cyber-security equipment, including computers, servers, routers, etc. All this equipment is necessary to enhance the efficiency and productivity of your business in its respective sector.
What is the best? Equipment Loans or Equipment Leasing
You can also consider leasing the equipment while taking business equipment loans. Here are some things about leasing and getting a business equipment loan.
Equipment Leasing
Leasing does not normally require a down payment. For those companies with little or no available capital, this is particularly beneficial. When a downpayment is required, it is usually relatively small in comparison with the regular loan downpayment.
Leasing provides a greater degree of flexibility for your small or online business. You can either return the item at the end of the rental or you will be able, once the principal amount has been paid in full, to purchase it for a small amount.
Equipment Loans
Each borrower will have a different set of terms but you can usually fund about 80% of the total purchase price of the item with a loan. You own the product from day one when you decide to purchase your equipment and fund via a loan.
For the majority of small business equipment loans, a down payment of about 20% is generally required. The collateral for the loan is the product you buy with the loan.
