Top 5 Uses for Equipment Financing

If you are a small business owner, run an office, or even work at home, you may need specialized hardware to do your job. If you don't have the capital to purchase equipment, you may want to consider equipment financing. Businesses big and small use equipment financing to manage cash flow. This type of funding can help purchase everything from office equipment to agricultural machinery or commercial ovens. It allows businesses to obtain new equipment without putting too much strain on their financial situation.

You may have some initial ideas of what you want to use this type of financing for, but before we get into the most common uses, let's quickly break down what equipment financing is.

How does equipment financing work?

You can choose to finance equipment through an equipment loan or lease, or with a working capital product like that offered by Good Funding. Equipment loans and leases provide financing for a specific purchase, such as large, expensive machinery. While working capital products usually offer more flexibility in how you use the funding. Typically, equipment loans and leases involve a long-term financial commitment with a traditional lender or leasing company. Companies like Good Funding offer equipment financing options with a faster turnaround, shorter terms, and more flexibility in how you use the funding.

How can you qualify for equipment financing?

For equipment loans, the typical requirements include at least one year in business, annual revenue of $50K or more and a credit score of about 550. When applying for equipment financing through a bank or credit union, you may have to work harder and longer to prove your business is a risk worth taking. Banks will sometimes ask for a thorough business plan, business financial statements, and years of tax returns to ensure lenders of your ability to pay back the loan.

Small businesses or startups may have difficulty meeting business equipment loan requirements from a traditional bank. That is why so many small business owners look to Good Funding for business financing. Good Funding helps business owners evaluate their financing options to ensure sound decisions lead to long-term success. Unlike a traditional bank, Good Funding considers several factors to determine if our funding is a good fit for your business. While credit score is part of the decision, less-than-perfect credit is not an immediate barrier to entry. The best way to know if you will qualify is to apply. There's no hard credit pull and no obligation.

What are the top 5 uses for equipment financing?

Equipment loans can be used for new and used equipment, big purchases such as vehicles, or smaller purchases such as computers and office furniture. Below are some of the most common uses of financed equipment.

1. Construction Equipment

According to Statista, the global construction market was estimated at $140.4 billion U.S. dollars in 2021. That number alone gives you a pretty good idea of how much equipment can cost. For example, an excavator can range from $100,000 to $500,000. Depending on your business size, you may not have the extra money to spend on expensive machinery. But if the equipment is necessary to conducting business, you need to determine the best way to finance it.

2. Updating Technology

Upgrading to the latest technology is a smart use of equipment financing. Whether you wish to invest in a software platform to help with invoicing and project scheduling, or your team needs tablets to increase efficiencies in the field, equipment financing can support your needs.

3. Farming Equipment

Depending on what type of work is done on a farm, a new tractor alone can cost up to $400,000. If you own a small farm, buying new expensive equipment can put your family finances at risk. Obtaining flexible equipment financing can get you the machinery you need while helping you maintain cash flow.

4. Restaurant Equipment

Running a restaurant takes hard work, and business owners always look for ways to increase productivity while keeping overhead low. The costs associated with buying and repairing kitchen equipment - not to mention bathroom fixtures, computer hardware and even bar TV screens - can add up and sink you if you don't plan wisely. Restaurant equipment financing can help keep business running smoothly and your customers happy.

5. Equipment for Business Operations

No matter what industry you're in, you have necessary equipment that helps you manage your business operations. Whether it's a large-format printer, computer hardware, office or lobby furniture, or even parts for your transportation fleet, equipment financing can even out operational costs.

Next Steps

Buying equipment outright can be costly, no matter your business size. If you want to improve your business, but don't have the funds, consider equipment financing. Good Funding offers a free no-obligation quote to see how much funding you can receive. All quotes can be completed online and will not impact your credit score. You could receive your funding in as little as one business day if approved!

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