What is Equipment Financing?.

Purchasing new heavy assets require a lot of funds. Given the liquidity constraint, it is not always possible for businesses to spare a huge amount of funds to make an upfront payment for business equipment like heavy machines, vehicles, etc. Equipment financing comes in handy during such situations.

Equipment financing allows you to purchase assets or lease equipment for your business without having to pay the entire amount upfront. Business equipment loans are a type of credit or lease that is provided to businesses to help them purchase new assets or replace and upgrade the old ones. Business equipment financing is provided for an asset that is tangible in nature (that can be seen or touched) except real estate.

Buying the right equipment to support your business operations is one of the first steps to a successful startup. Also, as a startup owner, you might not have enough funds to purchase costly assets. Equipment financing can be your savior!.

You can either choose to purchase an asset with an equipment loan or lease your business equipment.

Purchasing assets with equipment loan

If you take an equipment loan to purchase an asset, the asset will be kept as collateral with the lender until you pay back the entire loan amount and interest. In case you fail to repay the loan amount, the lender can take possession of the asset and sell it to recover the amount lent. Since it is a collateral-based loan, the banks generally provide 80%-100% of the equipment cost as a loan. Global Connect pro provides you with 100% finance for your equipment needs. This means that you don’t need to make any down payment.

You can get a maximum of $5million as a loan for purchasing business equipment. The loan term can vary from 1 year to 10 years while the interest rate varies from 4% to 13.25% per annum. With Global Connect Pro, now you don’t have to wait long before you receive the loan. You can obtain your equipment financing for new businesses within a period of 7 days.

Equipment Lease?

If you are not sure whether you will be able to make timely repayments for the equipment purchased, you can also take equipment on lease. Equipment leasing is an arrangement where the owner of equipment allows the lessee to use the asset for a specified period of time in return for periodic payments. This type of Equipment financing option can also be considered when you want to purchase machinery that becomes obsolete quickly. Generally, the cost of leasing equipment is lesser than the cost of purchasing it. However, you do not get the possession or ownership of the equipment in a lease contract.

Types of Equipment Finance?

There are 4 main types of equipment finance

Asset lease – Asset lease is a type of lease where you have the option of purchasing or owning the asset after paying the entire amount after the lease period ends. He can either purchase the equipment, refinance the equipment and renew the lease or start a new lease with a new asset.

Commercial chattel mortgage – Commercial chattel mortgage provides you with the option to own the asset at the time of purchasing. You purchase the asset with the help of the funds provided by the lender. The lender then keeps the asset as a mortgage which is removed once the borrower repays the entire loan amount in full. This allows the borrower to have a title over the asset or equipment.

Equipment on Rent – It is similar to leasing wherein the lender purchases the equipment and rents it out to the borrower in return for fixed monthly payments. After the rent contract ends, the borrower can either return the equipment, purchase it from the lender or continue the rent contract.

Cashflow financing – Cashflow financing is a type of financing where you can use your future cash flow as collateral for obtaining a loan. The loan amount can be used for various purposes, including purchasing assets and equipment.

Are you eligible for an Equipment loan?

Before you decide to take an equipment loan it’s important to first know if you are eligible for it. Given below is a list of eligibility requirements for obtaining a business loan..

  • The annual revenue of your business should be $100,000 and above.
  • The personal credit score of your business should be 575 or above.
  • Your business must be at least 1 year old.
  • The registered office of your business should be located in the U.S.

Why Equipment Financing?

Shall I opt for Equipment Financing? This question must have crossed your mind several times. There are many benefits of opting for an equipment loan even if you have enough funds to pay for them. Given below are some of the reasons why you should go for a business equipment loan.

Increases working capital

Equipment financing saves you from spending huge chunks of money and increases the working capital of your business. You can use this working capital for financing your day-to-day business operations. It is normal for any business to experience a cash crunch and having to obtain equipment using that money can disturb the entire flow of your business operations.

Timely up-gradation of equipment

Equipment financing makes it easier for you to stay updated with the latest technological advancements and purchase new equipment without having to bear the costs upfront. With equipment financing, the cost would never be a constraint in your technological upgradation.

Tax benefits

One of the most important benefits of equipment financing is the tax benefits associated with it. The interest paid on an equipment loan is tax-deductible. You can write off the interest amount that you pay on your equipment loan from the tax. This is one of the most important reasons why you should consider financing your business equipment.

Use business loans for other important purposes

If you use a business loan for financing business equipment you will have less amount of credit left for other purposes. Equipment loan helps you free up your line of credit for other purchases. You can use it for your other business requirements.

What do you need to apply for Equipment financing with Global Connect Pro?

Eligibility requirements

  • Your business should be at least 2 years old.
  • The registered office of your business should be located in the U.S.
  • Your personal credit score should be above 600.
  • The annual revenue of your business should be $120k or more during the last 12 months.

Why Global Connect Pro?

Global Connect Pro provides you with a hassle-free loan application process and assists you throughout your loan tenure. It provides you with a personalized experience and helps you obtain the assets or equipment for your business needs. The payment options are simple and you can apply for the loan in less than 24 hours. It boasts of a legacy of helping businesses obtain loans for over 10 years. A team of financial experts will be at your service throughout the process.