Fortunately, credit unions and banks aren’t all the places to find the financing you need for your equipment. Things have changed, and you now have a variety of choices. To fund the crucial equipment that your business start-up needs.
Equipment Financing Credits from Banks
Credit unions and banks can still be viable options for loans for equipment financing. However, they’re not available for some startups or business owners. If you do not have good or outstanding credit. Obtaining equipment with the traditional banking system is almost impossible because they generally only approve applicants with high-quality credit scores. Even if your credit score is on par. It will require a lot of paperwork and lengthy wait times to receive a final approval. If you find yourself in a situation where your business urgently requires equipment. Lack a significant down payment, aim to avoid liens on personal or business assets, or are facing credit challenges. Traditional equipment financing from banks might not be the ideal choice.
Equipment Financing Credits from Vendors
Equipment dealers, faced by a decrease in sales, started offering loans for equipment financing to their customers. It gave business owners an opportunity to acquire the essential equipment they require without using the normal channels of banks. Vendors develop financing programs for equipment via direct lenders, such as Commercial Lending USA & Leasing Services (GFLS). These programs benefit the buyers as well as the vendors. Buyers might explore the option of financing a larger equipment piece instead of opting for the purchase of less expensive machinery falling within the bank’s approved limit. Vendors can sell equipment to customers who would not otherwise be able to access traditional banks. Vendor financing provides consumers with increased flexibility. Especially when the vendor collaborates with a dedicated lending company focused on finalizing transactions.
SBA Equipment Financing Loans
The Small Business Administration (SBA) is a federal entity that offers government-backed, cost-effective loans to small business owners. The SBA guarantees a portion of the loan a business owner gets from lenders like banks and non-profits. SBA loans are not as risky for lenders and may have lower interest charges and extended terms available to the borrowers. For instance, the current rates of interest for SBA loans as of the month of September are as follows:
- SBA 7(a) loans: 7.75%–10.25 percent
- SBA CDC/504 loan: approximately 5.39% to 5.46 percent
- EIDL loans for COVID relief are 3.75 percent for businesses that are for-profit and 2.75 percent for non-profit businesses.
- Loans from PPP: 0% if forgiven or not paid.
- Rates for maximum amounts on all other SBA catastrophe loans are: 4.00 percent with credit not elsewhere, or 8.00 percent if credit is available elsewhere.
SBA loans are a viable alternative for entrepreneurs with good credit. Who want to grow or expand their businesses that require equipment. Nevertheless, the approval and application process can be time-consuming. And a significant portion of applicants are denied due to factors such as poor credit, unfavorable character, insufficient collateral. Inadequate income or capital for repayment, and an inability to meet loan obligations.
Financing Equipment Through Sale or Leaseback
The process of financing business equipment with the sale or leaseback process is similar to making use of your home equity to make the purchase. A loan for equipment sales or leasebacks is a possibility if your business has assets such as vehicles, machinery, and construction tools.
The equipment is either sold or leased; however, it continues to serve business functions. Because the transaction can be backed by the equipment itself, this kind of loan is relatively straightforward to qualify for. It can be structured in a manner that makes you the owner of the equipment upon the conclusion of the designated time period. Which typically ranges from 24 to 60 months. The payments are tax-deductible. Leasebacks on sale usually require an appraisal of the equipment from a certified asset appraisal company. Additionally, the lender may lend to advance a portion of the force liquidation value, which is the appraised value.
Equipment Financing Through a Direct Lender, Like Commercial Lending USA and Leasing Services
Commercial Lending USA & Leasing Services (GFLS) is a direct funder that offers financing options that traditional banks can’t. In certain circumstances, we have the ability to leverage our connections with numerous institutions. And banks to provide you with the most appropriate financing solution that fits your financial profile. The end result is that you will receive the best financing solution for your requirements. And have access to funds quicker.
Contrary to large bank applications, our application process is easy and efficient. Ensuring that you will receive a response in less than 24 hours. Contact one of our expert equipment lease financing specialists at +1 (855) 365-9200 or begin your application now.