Equipment finance is a common procedure chosen by many companies. This is part of a business recovery program, helping them improve cash flow and their working capital.
This procedure usually involves a lender that is providing a business finance which is secured by a piece of equipment. Equipment finance is perfect for businesses that cannot get finance because the equipment is used as security and in the case they default on payment, they will have their equipment taken anyway. This method is also beneficial to the lender, because they benefit from a secured loan, preventing them from waiting in a long queue of other creditors to get payment.
Equipment finance is a perfect choice for companies that are trying to get traditional funding, such as start-up businesses. They will be able to have the necessary equipment for their business to function.
The majority of finance providers will help you purchase the equipment, which can range from computers and furniture to vehicles, plant and various machinery. Equipment finance can sometimes be a cheaper option compared to traditional methods of finance or paying cash. With this option the company can start its business and make regular payments over a period, instead of having one lump sum being taken out at once. It is, therefore, a financing method that helps keep money in the business rather than being tied up in assets that could depreciate.
Economic times and the current economic environment are a challenge for many businesses today. These challenges are especially felt by small businesses and entrepreneurial startups that are struggling to get a place in the market, grow or just maintain their position in the business. Buying equipment through leasing is the most customizable and flexible to meet each customer’s business needs.
Equipment finance allows companies to focus their cash on other business areas, such as working with current customers or developing new products.
As with any type of financing, there are also disadvantages. One of those is the fact that you do not own the equipment until you have fully paid for it. In the long term, the equipment could be more costly than with down payment. But the benefits surely outweigh the drawbacks, and equipment finance is a sure way to get the necessary machinery and vehicles to make your business work.
Before you decide to choose this option, make sure you talk to a specialist in this field, to fully understand what it involves.