Business Equipment Loan

When searching for a business equipment loan there are a few things you’ll want to keep in mind. Lenders will often issue a commitment to approve an equipment loan for a certain amount. This conditional approval will allow you to shop around knowing the financing is available. Here are five considerations that will help you set a realistic expectation for your loan request.

1. Equipment loans normally have a shorter term and are fully amortized (typically 2 -5 years). This will make your loan payment higher than other loans. Rates can be variable or fixed.

2. New equipment is easier to get a loan for than used equipment. If you choose to buy used equipment an independent valuation may be required depending on the size of the loan.

3. You will want to secure your loan before you purchase the equipment. Cash out on existing equipment is very difficult to get.

4. Not all equipment has an equal collateral value to the bank. Computers and software are considered disposable due to a lack of resale value; while heavy equipment or vehicles would be a better source of collateral to your lender.

5. 100% financing is almost never available. Putting 25% down toward the purchase of the new equipment is a good place to start. Some lenders may require more down.

When your business equipment loan is funded the lender will either cut a check to the seller of the equipment, or a two party check that would need your endorsement as well as the sellers. The lender will want to see the purchase order or invoice to get the right payment information and ensure the proceeds of the loan are going to purchase the said equipment.

Related Posts

Comments are closed.

business loan clients