How to Use Equipment Financing to Help Cash Flow Problems
A major issue for many small businesses is a lack of working capital. If you’re facing cash flow problems, you need a dynamic financial tool to propel your company forward. Discover how equipment financing can give you the tools you need to continue to provide quality services for all your customers without draining your working capital.
Financing your equipment works similar to any other loan option. You’ll immediately receive the equipment you need for your business, and in return will pay back the entire value with interest. While you’ll pay more than buying the equipment outright, you’ll save your working capital and prevent cash flow issues.
There’s a wide range of equipment available to finance. From major construction equipment to high-tech computer technology for your office or medical center, financing can help you purchase nearly any equipment you need to expand your services, upgrade your existing equipment or launch your business. It’s a competitive way to stay ahead of your competition and only use the latest tools of the trade.
Just like a typical loan, you may have to make a down payment to receive your equipment. You’ll also need a strong credit score and fill out an application. Once approved, you can receive your equipment quickly and get started providing your professional services.
Most equipment loans are backed by the equipment itself. This means that, in the event of a default, you’ll simply return the equipment that was being financed. You won’t need to provide additional collateral, so this can protect your other company and personal assets. This reduces the risk of financing, particularly costly equipment.
Financing works best when your equipment is rugged and unlikely to become ineffective or outdated in a few years. Construction machinery that’s built to last for years with little maintenance is a great example. Computers that are quickly improved and obsolete, however, may not be the best option for financing. A short-term financing schedule may be beneficial for these types of equipment investments.
Consider your business situation and determine whether financing is right for you. If you only need machinery for a short period of time, consider an equipment lease instead. Otherwise, you could dramatically improve your cash flow issue and retain your working capital by selecting a competitive equipment financing option. Discuss your options with a lender you trust and learn more about your financial options when it comes to receiving the equipment you need.
