The textbook definition of equipment financing is a lease or loan used to obtain equipment for a business. Adding machinery to the term only means the equipment obtained is machinery or manufacturing equipment of some sort. There is equipment financing available for all industries, such as medical, restaurant, printing and more. Equipment financed is usually essential to a business’s operations and considered an asset, and therefore doesn’t include real estate because property is obtained via a commercial real estate loan.
Why Business Owners Need Access to Machinery Equipment Financing
If you follow any corporate moguls on social media, listen to business-related podcasts or read finance news, then you know how very rarely business owners and leaders contribute their success to luck alone. Maybe a few lucky breaks here and there or being in the right place at the right time, but success comes from making smart and strategic business decisions. Often, business decisions are based on whether or not you can afford to make them.
Regardless of how strong cash flow is, having access to equipment financing is especially important for business owners in industries that require machinery and/or manufacturing equipment because their cost runs tens to hundreds of thousands of dollars.
Having a source for equipment financing is just as critical for startup entrepreneurs who need machinery equipment financing to get their business off the ground.
Either way, considering the high price of machinery and manufacturing equipment, financing a purchase or lease means taking on a monthly financial commitment—one that will help your business grow and generate a level of revenue that more than covers the lease or financed purchase payment.
Machinery Equipment Financing Vs. Equipment Leasing
If you need to finance your machinery or manufacturing equipment, you have two options. Take out a loan to purchase it or lease it. Making the best and smartest decision for your business and circumstances depends on two main factors:
- Your personal and business credit rating because those affect your ability to qualify for financing
- The useful life expectancy of the equipment you’re financing
Let’s take a closer look at these factors.
If you have a good or excellent credit score, equipment financing is far easier. However, if your credit score is 640 or below, you will find a limited number of lenders willing to finance your machinery or manufacturing equipment.
LEARN MORE: Can I Finance Equipment with a 640 Credit Score?
Machinery and manufacturing equipment are workhorses designed to last for years with proper maintenance and service. So, the useful life expectancy is long. Think in terms of useful then to your business. Will you keep the equipment for the long haul? Then, financing its purchase may make the most sense. Will you be upgrading soon or using it for just a handful of jobs? Then, equipment leasing might be the way to go.
LEARN MORE: Your Approach to Financing an Equipment Lease Matters
Talk to One of Our CLFPs About Machinery Equipment Financing for Your Business
Global Financial & Leasing Services (GFLS) has Certified Lease and Finance Professionals (CLFP) on our team to help you choose and get the equipment financing that’s right for your business goals and finances. CLFPs must pass various tests and meet strict professional and ethical requirements to become officially certified, making them more reliable partners than non-certified lenders.
CLFPs are the best of the best in equipment financing. They demonstrate extensive knowledge of the field, and also, have never been involved in any questionable transactions. When you work with a CLFP like those here at GFLS, you know that your lender is competent and has your best interest in mind.
GFLS can finance almost any business seeking to acquire equipment. With our in-house funds and relationships with over 200 private label and public banks, we have the ability to finance those who have been turned down by the banks due perhaps to prior bankruptcy, student loans, tax liens and bad credit. Want to learn more? Let’s talk about the possibilities. Or, get started today by filling out an online application.