Adding new, updated equipment is often the best way to keeping your small business at the forefront of competition while simultaneously increasing your profits. New equipment can be very expensive though, requiring your company to seek business loan funding. While securing small business financing can be tricky, doing a little research can help you put together the right loan package for your firm.
The first step is to determine your loan needs. How much money do you need to borrow? How quickly can you repay that amount? How will the equipment help you ramp up your revenue or cut your operating costs? Lenders will want to know the answers to all these questions.
Selecting the type of lender you use is the next step. Traditional banks and credit unions typically offer the best interest rates and repayment terms on the market, but their approval rates are also among the lowest. If you have excellent business credit, a stellar record of business experience, and an airtight business plan, these establishments are a great choice.
If you do not fit into that category, you could consider an online lender. While their interest rates and fees will be higher, the turn-around time for processing applications is much faster and their approval rates are much higher. It is important to fully understand the total financial cost of these loans before signing, but they can be a good choice for smaller business loan amounts.
With either type of lender, look for loan terms that do not last longer than the usefulness of the equipment. For example, if you believe the equipment will only be valuable for the next 5 years, do not take out a business loan that lasts for 10 years. This would leave you with debt for something that is no longer bringing your company revenue.
After doing your homework, getting the perfect equipment business loan for your company will be easier than you expected.
