All businesses require a type of equipment to perform their operational activities. For example, construction companies need bulldozers and excavators, while creative services companies may need long-arm quilting machines. While some businesses can purchase their equipment in full, others may lack the capital. Thankfully, equipment financing offers a practical funding solution for expensive equipment. If you’re choosing equipment financing for your business, you should learn the basics and how it works!
Equipment financing involves using a loan to secure equipment for your business and allows you to begin using the equipment almost immediately. Like a car loan or mortgage, you’ll have to make regular payments on the financed equipment. After you make a down payment to your lender, you can make monthly payments until your equipment is paid in full.
How Does it Work?
If you need equipment for your business but lack the funds to purchase it, you can use equipment financing to secure it. First, contact RTF at 888-237-3533 to inquire about our financing programs. We can then negotiate loan terms aligned with your business’s needs. After agreeing to the terms and making a down payment (if necessary), We will loan you the equipment under the agreement that you make regular payments until the loan is paid off.
What are the Benefits?
- It requires little or no capital.
- You can use financed equipment before it’s fully paid off.
- Once paid off, you’ll have complete ownership of the financed equipment.
- You don’t have to place property or other assets up for collateral, as the financed equipment itself is generally used as collateral.
Equipment Financing vs. Equipment Leasing: What’s the Difference?
An alternative way to secure expensive equipment for your business is to lease it. While similar to equipment financing, though, equipment leasing works differently. With equipment leasing, you pay to use the equipment for the length of the term.
The critical difference between equipment financing and equipment leasing involves ownership. After paying off an equipment financing loan, you’ll own the equipment. After reaching the end of the lease term with equipment leasing, you’ll generally have the option of renewing the lease, canceling the contract — and therefore returning the equipment — or purchasing the equipment according to the lessor’s terms.
For more information on startup and business funding, or to complete an application, email Carrie@financewithafp.com!