For small business owners who need to buy expensive equipment, equipment financing can be a good choice. The pros and cons of Equipment financing are often a matter of personal preference. However, you should consider the pros and the cons of each type before deciding on which one suits your needs. In many cases, equipment financing is the right choice for businesses, allowing them to stay on the cutting edge and provide customers with the best possible products. Furthermore, it is easier to obtain a loan for your equipment without putting any assets up as collateral, which means less stress for you and your business
We've put up a list of pros and cons for equipment financing to help you decide if it's the correct finance option for your company.
Pros of Equipment Financings
- Speed
Get the equipment you require as soon as possible. Equipment financing allows you to get your hands on funds quickly and even offers a very simple application form on the website.
- Receive Funds to Purchase, Repair, or Lease Equipment.
Even if your company is well-established, there's a good chance you don't have the money to invest in new equipment. These types of loans, fortunately, provide cash for equipment needed for your business.You don't have to wait until you have enough cash on hand to make a significant purchase or repair equipment you already own since business equipment loans allow you to borrow money specifically to pay for equipment. Having this money on hand can help your company's bottom line; waiting to buy, lease or repair equipment might affect your annual revenue, especially if the equipment is essential to your operations.
- No Collateral Needed
There's no need to offer upfront collateral and risk losing it if you default and are unable to meet your payments because the equipment itself will act as collateral. This can be quite advantageous because it reduces your downside risk.
- Spread the Cost of Your Purchase
Cash flow is a constant worry for any business owner, and equipment purchases only add to the problem. However, because an equipment loan allows you to spread your costs, it can help businesses deal with the cash flow issues that come with equipment purchases.
- Increase the Future Sales of Your Business
If you get an equipment loan, you might be able to improve your company's overall productivity. You'll be investing in your business and possibly earning more money in the long run if you get an equipment loan.
Cons of equipment financings
- Owning the Equipment
Depending on how you look at it, fully owning business equipment could be a pro or a con. When you take out a small business loan for equipment, you’re borrowing money to purchase and own equipment. Equipment leasing is an alternative to this. When you lease equipment, you make monthly payments to utilize it and then return it at the end of the lease.
Owning rather than leasing equipment that may become obsolete or deteriorate quickly could be more expensive for your business. Owning, on the other hand, is usually more affordable for long-term equipment.
- Usage Is Restricted to Equipment
This specific sort of loan is just for equipment, as implied by the name 'equipment financing.' You won't be allowed to use your equipment loan for anything else if you need the money for something else, such as hiring, rent, or other expenses.
- You are Responsible for The Equipment
Meaning you are responsible for all maintenance charges if something unexpected happens with it. Owning the equipment goes hand in hand with this.
Although there are some pros and cons to equipment financing, it's worth considering this type of loan. If you have any questions regarding equipment financing, our seasoned and professional lenders are here to answer any questions or concerns that you may have. Call us today or fill out the application on our website to get started.