Why Is Equipment Financing Good for Business Growth?

As you set goals for your business and achieve them, you need to carefully balance your work capabilities and available capital. On one hand, you need to invest in your company to increase your revenue, but you also must keep plenty of working capital on hand to cover day-to-day essentials. Did you know that equipment financing is one of the best ways to balance these needs effectively?

Get Equipment Without a Large Down Payment

Conventional loans can be useful for business needs, but they have several key downsides that make them difficult to work with. First, banks often have excessive requirements for applying businesses, such as credit ratings that are practically perfect. Banks also want your business to put down a large amount of capital, sometimes 30% of the loan’s value or more.

This situation is hard on your business because you need to keep savings on hand to avoid precarious situations. Your liquid capital helps you purchase inventory or cope with unexpected challenges effectively.

On the other hand, equipment financing handles things differently. Whether you choose an equipment loan or a lease, you don’t need a ton of funds to complete the transaction. Some equipment financing doesn’t need any down payment at all. Other agreements give you options for 5%, 10%, 15%, or 20% down payments. This allows you to preserve your available capital and still get the equipment you need.

Manage Your Monthly Expenses Comfortably

You can choose between equipment loans and equipment leasing when it comes to acquiring the items you need. Loans are designed to save you money in the loan run while you purchase high-value equipment that lasts decades.

What if you can’t afford the monthly loan payment? Don’t get discouraged. Just go with leasing instead. An equipment lease often makes it possible to get the items your business needs for a comfortable monthly payment. You can save hundreds of dollars or more compared to loan payments, though the long-term interest rates are higher.

Some companies start leasing and go with a loan later on. That way, they have the flexibility to build a stable business before investing more revenue in growth.

Take Advantage of Growth Opportunities

Whatever type of financing you select, don’t let good opportunities pass you by. The equipment enables new businesses to perform as well as established companies. The right equipment helps you boost your productivity and work abilities, driving customer satisfaction and profits.