For many people, the new year is a time for setting personal resolutions. Yet, statistics indicate most people let theirs slide by the end of February. For business owners, it’s not only the start of a new year, it’s first quarter—a time to kick off year-long sales goals, new initiatives and grow your company. Business “resolutions” aren’t as easy to let slip because there are livelihoods, including yours, counting on your follow-through and success.
If 2023 is the year you’re going to need to finance essential equipment to achieve your goals, here are a few of the best options for business owners to consider.
- Bank loans: You can apply for a loan from a bank or other financial institution to finance your equipment. This option may have a lower interest rate, but the application process can be lengthy, and you may need to provide collateral, as well as meet a minimum credit score requirement.
- Small business loans: If you are a small business owner, you may be able to qualify for a small business loan from the government or a private lender. These loans are specifically designed to help small businesses finance equipment, among other things. The application process is wieldy and the time can lag between application and funding. Generally, very good to excellent credit is required to qualify.
- Leasing: Instead of buying the equipment outright, you can lease it from a leasing company. This allows you to use the equipment without having to pay the full purchase price upfront. However, you will need to make regular lease payments and may or may not have the option to purchase the equipment at the end of the lease, depending on how the lease is structured. Another option is to finance the equipment lease.
- Equipment financing: There are specialized, direct lenders, like Global Financial & Leasing Services (GFLS) who offer equipment financing, which is a loan used for the purpose of buying (or leasing) essential business equipment. The terms of these loans can vary, so it’s important to shop around and compare offers, application processes and customer service to find the best match for your business and credit score.
- Vendor financing: Some equipment vendors offer financing options to help you purchase their products. This can be a convenient option, but be sure to compare the terms of the vendor’s financing to other options to ensure you are getting the best deal.
Even Those with Less-Than-Perfect Credit Can Qualify for Equipment Financing
If you have credit blemishes, it may be more difficult to secure financing for equipment. However, there are still ways you can get the equipment your business needs this year.
- Personal loans: If you have a good relationship with a bank or credit union, you may be able to get a personal loan to finance your equipment. The interest rate on a personal loan may be higher if you have B or C tier credit, but it can still be a possibility. Keep in mind that in most cases it’s considered smarter to keep business and personal finances separate. Intertwining the two puts both at risk should one go south.
- Crowdfunding: If you are unable to secure financing through traditional channels, you may be able to raise funds for your equipment through crowdfunding. There are several crowdfunding platforms that allow business owners and entrepreneurs to pitch their ideas and solicit small investments from a large number of people. Crowdfunding is an option for both new and existing companies, but it’s gained popularity among startups in recent years, and for many has been quite successful in supporting their launch.
- Equipment financing: Some equipment financing companies, like GFLS, specialize in working with business owners who have less-than-perfect credit. LEARN MORE: Can I Finance Equipment with a 640 Credit Score?
- Leasing: Leasing equipment may be a good option if you have bad credit, as the approval process is often less stringent than for a loan. However, as noted above, be aware that you will need to make regular lease payments and may or may not have the option to purchase the equipment at the end of the lease. LEARN MORE: Loans vs. Leases: Choosing the Right Option for Equipment Financing
What Should Business Owners Look for in a Lender?
When looking for a direct lender to finance your equipment, there are five things you should consider:
- The interest rate on your loan will directly impact your monthly payments and the overall cost of financing your equipment. Partner with a lender who is willing to help you obtain the best deal for your budget and credit situation.
- The loan terms, including the length of the loan and any fees or charges, can significantly affect the overall cost of your equipment financing. Be sure to understand all the terms of the loan before you agree to it.
- It’s important to work with a reputable lender with certified professionals who have a history of fair and ethical lending practices. Do some research and read reviews to get a sense of the lender’s reputation.
- If you have questions or need help during the loan process, it’s important to work with a lender that has good customer service. Look for a lender who is responsive and willing to help you with any issues that may pop up.
- Consider whether the lender is willing to work with you to tailor a loan that meets your specific needs. A lender who is willing to be flexible and find a solution that works for you will be the best fit.
GFLS provides equipment financing solutions with no hard cap on the amount for a wide range of companies and a wide range of credits with no minimum FICO score requirement. Ready to learn more? Let’s talk about the possibilities. Or, get started today by filling out an online application.