This also allows you to borrow more than the value of the equipment. The alternative is a hire purchase, which means the bank or lender retains ownership of the equipment until the loan is settled. Equipment financing enables you to pay for the equipment over time instead of paying for it all at once. The reduced initial cash outlay can help you save money for future business expenses and initiatives.

Small Business Equipment Financing

Companies need to have cash reserves in place to soften the blow if a negative event impacts the company’s bottom line, such as a recession, rising costs, or the loss of a large client. Startups can get equipment financing—but it may be necessary to provide a larger down payment or pay higher interest rates than available to established businesses. Not only do new businesses not have established credit scores, but they also lack the history of financial records and revenue that lenders look for during the approval process. Interest rates are also lender-specific but may range anywhere from 2% to 20%—or even lower if you qualify for dealer or manufacturer financing. Traditional banks and credit unions may have the most competitive rates and repayment terms but usually have more stringent qualifications. Equipment financing is also available through online lenders, often with faster funding speeds and lower credit score requirements.

Financial Support to Help Canadian SMBs Impacted by the COVID-19 Coronavirus Crisis

Rates and terms vary from lender to lender, so make sure to compare all available options before signing any contracts. Still, it can wind up being more expensive in the long run, as leasing generally comes with higher interest rates. If your company requires specialized operational equipment, you have a few different options for business equipment financing. Commercial equipment loans are a secure way to purchase the large inventory that you need without the undue stress weighing on your business.

  • An equipment finance loan can be just the thing you need to launch or grow your business.
  • Having the cash from a large loan in your corporate account might tempt you to overspend.
  • Equipment loans designed with the best structure and term for you are just one of the many solutions we can provide for your business.

That’s why we provide you with the capital you need—when you need it. ✔ We offer one of the widest arrays of loan programs amongst any direct lender. The information contained in this article is correct as of July 2018 and is intended to be of a general nature only.

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Equipment financing is an efficient tool to access new-age equipment while conserving the business’s cash reserves. Enterprises can utilise the ample cash reserves of the company to diversify into new products, expand the business, improve efficiency, expand profit margins and generate tax savings. Yes – businesses with bad or impaired credit can apply for business equipment finance. Yes – many of our lenders understand the needs of seasonal businesses, offering flexible repayment terms. Taking out a chattel mortgage or hire purchase means you can claim GST, depreciation, and interest payments on your BAS, or as an instant write-off.