Equipment Financing
Equipment financing allows businesses to acquire necessary equipment
without making a large upfront payment.
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Equipment Financing
Equipment is something that the business uses to generate revenue.
Any business that is in business has equipment.
Equipment Includes
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Office equipment. (Like phones, computers, software etc) for business use
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Medical hardware.
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Retail related. (Restaurants, hotels, etc)
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Farming equipment.
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Transportation industry related.
A Few Things You Should Understand
The Lender Does Not give you the money to buy a piece of equipment. They give the money to the company that you are buying the piece of equipment from. They need to know who the seller is, because they are paying that seller directly.
They need to see things like a (sales invoice), because these funding partners are also vetting the vendor to make sure, they are who they say they are.
They're also going to ask for the wiring instructions of the vendor, so they know how to pay the vendor once the equipment has been delivered.
Qualifications for Equipment Financing
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The lenders need an invoice, a quote, a bill of sale that shows who the seller is,
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A credit report, & three to four months of bank statements.
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They're also looking at things like the customer's credit score and how long the customer has been in business.
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With equipment financing, they do not have to be business bank statements, they can be personal bank statements, if we can see there is business activity going on in those bank statements.
Types of Leases
Lenders typically have two different types of leases that they use for equipment financing. They are (Operating Leases and Capital Leases).
Equipment Financing Agreement. The most popular type of operating lease. It's just like a loan. You make monthly payments and when you've made your last payment the equipment, and title is yours. But that is not always the case, it depends on how the lease is written up in the beginning.
There are also Security Deposit Leases. Which falls under Capital Leases. You might have to pay a security deposit of 10% to 20% at the beginning of the lease.
And at the end of the term if you want to keep that piece of equipment you forfeit the security deposit. But if you don't want to keep the equipment then as long as the equipment is in good working order the lender will refund that security deposit.
They also have programs for seasonal businesses like agricultural companies. Where they might Not be able to make monthly payments, but they might be able to make payments (once a quarter, or every six months or even one payment a year).
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