Is financing equipment a good idea?
While it’s certainly not the right option for every business, equipment financing does tend to offer more flexible terms and qualifications and may offer faster funding speeds than other loan types. For many small businesses, the pros of equipment financing may well outweigh the cons.
Highly qualified businesses, however, may also want to explore a more traditional bank loan or an SBA loan as those may offer lower interest rates and more desirable terms.
Can startups qualify for equipment loans?
Yes, some startups may find they have better success qualifying for equipment financing over other loan types. Many equipment lenders are willing to be more flexible on their business loan qualifications since the loan is secured by the equipment itself.
What is the difference between equipment financing and equipment leasing?
Equipment leasing is another option for acquiring necessary business equipment without a total upfront cash outlay. There are some key differences, however, between equipment financing and equipment leasing. Once you’ve paid off an equipment loan, you own the equipment. With an equipment lease, you may have the option to purchase the equipment at the end of the term or enter into a new lease. In general, leasing equipment tends to be more costly over time than financing equipment. But leasing may make more sense if, say, you only need a large piece of equipment for a single project or a short amount of time.
Check out our equipment leasing vs. financing guide to determine which option is best for your small business.