Equipment Financing

Getting an equipment lease or financing can help you fund a variety of business needs. This financing solution can be used for things like: 

• Vehicles
• Heavy machinery
• Restaurant appliances
• Medical equipment
• Office furniture
• Technology systems

Regardless of your company’s industry, exploring your equipment finance options could help the success of your business. Plus, equipment lenders usually report to business credit. The more business credit you build the greater opportunity you have in the future to receive the best rates and terms for the money you receive and increase your businesses ability to receive future loans without a personal guarantee.

The largest difference between an equipment lease and equipment loan are that an equipment lease has a fixed term, in which you pay a monthly rental feel, with no prepay benefits, and an equipment loan can be paid off at any time with any remaining interest wiped clean. 

There are multiple structures available for equipment leasing including:

• Equipment Financing Agreement: Fixed payments are made over a set term after which you own the equipment in full.
• Fair Market Value: Fixed payments are made over a set term after which you can return the equipment, renew the lease or purchase the equipment at fair market value. 
• Purchase Upon Termination: Require the customer to purchase the equipment at the end of the lease term at a certain percentage of the original purchase price.

Equipment financing is a type of funding that gives you full ownership of the equipment. You’ll pay interest in addition to the principal balance, usually as a fixed monthly payment. But once your financing  term is over, you own the equipment free and clear. 
Choosing the best equipment financing option depends on the type of equipment you need, how long you expect to need it, and how frequently you plan to update those assets. 

Your equipment financing payments are determined by four things: 

• Funded amount
• Interest rate
• Term
• Collateral

These factors can vary widely across industries and equipment types. That’s why we work with a variety of lenders who specialize in industry-specific small business loans, so we can help you find the best deal.

If math isn’t your thing, you can use our equipment financing calculator to figure out what kind of monthly payments you can afford. 

Also consider both the short-term and long-term gains your new equipment will yield. To determine whether equipment financing is getting you some real bang for your buck in the short term, you should weigh the costs of your monthly payment against the benefits your new equipment will bring. 

Here’s an example: if the 3-D printing equipment you’re financing costs you $600 in monthly payments but enables you to take on an extra $2,300 in monthly orders, then your cash flow increase considerably outweighs your costs and makes the financing worthwhile.

This same concept applies to the man-hours you’ll save by leveraging a software purchase to automate several hours of invoicing and payment processing, or being able to attract new business because your upgraded sorting equipment lets you offer significantly faster shipping times than your competitors.

To figure out whether you’ll also see a hearty long-term return on investment, consider the longevity of the equipment you’re financing. Equipment that only gives your business a minor lift and may be obsolete in a few years when you pay off your financed amount may not give you the long-term leg up that you’re looking for, whereas receiving a funded amount over a 4-year term on equipment that will last for several years beyond that could be a much better investment.