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(844) 860-2288
(844) 860-2288
The benefits of securing equipment financing are a way for your business to gain flexibility and financial security. It’s a perfect way to acquire equipment for your business without hurting your working capital. Based on Equipment Leasing and Finance Association – more than 80% of all U.S businesses have some sort of loan cushion. Financing is the backbone of our economy. Small businesses are twice as likely to finance or lease equipment rather than purchase it. Also, they are more dependent on owner’s capital than larger companies who have large cash positions. Let’s review the benefits with this type of financing below:
One of the major benefits that equipment financing offers a business is a way to purchase equipment using financing. Business owners hesitate to purchase equipment because of being worried about not having enough working capital to sustain their business operations. By financing equipment, you get to retain your cash and budget the remaining capital on other business expenditures. Also, if the equipment holds a lot of value, you can finance or lease the equipment without any down payment.
By financing equipment, you can improve your cash flow by securing a piece of equipment that you know would yield higher revenue for your business. Projecting higher revenue also helps to pay for the equipment as an add-on cost to your current budget. If you are financing or leasing new equipment and the equipment is a preferred piece of asset with a lot of value, its typical for a lending company to provide favorable terms or extension from original terms. You can walk away with a very favorable equipment financing deal.
The terms for used equipment ranges from 48-60 months and for new equipment the term ranges from 72 to 76 months. With a longer term, your payments should be much lower and affordable. Having lower financing payments should not drastically affect your cash flow and working capital needs. At Creditfy, we want every customer to get the best equipment financing rate and term to fuel their businesses growth.
You can finance 100% of the equipment cost without putting a down payment, the entire amount plus extra. Lenders typically ask for 10-20% down payment if you have a poor or low credit score but otherwise it strictly depends on the equipment that you’re financing. Besides having the opportunity to finance 100% of the asset. You can also finance the soft cost associated with it such as delivery fees, installation, training, sales tax or extended warranties. The additional 10% to soft fees really depends on the lender, some do not offer such option or cap it around 5%. It also depends on the type of asset that you’re financing. If you are financing new equipment versus old, your chances of having such option increases. As well as having strong business credit along with good credit score.
Equipment financing offers flexible terms and rates. Typically, with excellent credit score, time in business and preferred equipment you can obtain a rate of 5-7% depending on overall terms. The rates are more favorable than any other type of financing with a main reason that the equipment you’re financing is used as collateral. The reason why this is a more favorable product of all because it carries less risk for the lender. The terms are favorable as well but depend on the equipment’s depreciation and life value. For example, construction equipment has far more life value than fitness equipment, so lenders offer better terms to construction equipment. Terms are longer than business line of credit, working capital loan or using credit cards.
Securing financing can take as much as 24 hours and just couple of hours to get an approval. You can finance up to $175,000 and on preferred equipment up to $250,000 without any financial statements making the process very fast and straight forward. The fast process depends on how fast you can provide your documents as well as the vendor that you’re purchasing the equipment from. If you’re purchasing equipment from a preferred vendor who is well established, it could help with making the funding process faster.
Having the freedom to secure equipment with 100% financing, you don’t have to tap into other sources for financing. If you have an available business line of credit you rather use equipment financing versus tapping into the line to preserve cash. Business line of credit is more expensive than equipment financing so not only you’re leaving that credit source available for the future use but you’re also saving on not paying higher interest and fees.
Financing or leasing equipment can have beneficial tax savings. If you lease equipment, you can expense the cost against your net earnings making your taxable income lower. If you are purchasing the equipment, the IRS tax code under Section 179 allows you to deduct the full purchase price of the qualifying equipment that is financed during the tax year. This saving could add up to a substantial amount of money and per the U.S government. The tax code was introduced as an incentive to encourage businesses to buy equipment. Some customers purchase equipment just to rent it out with hopes of recovering some of the payments that they contribute on monthly basis just to save on tax.
Business owners need to consider upgrading or purchasing new equipment in order to avoid their equipment breaking down as well as avoid repair costs. Truck drivers consider this option a lot when their truck mileage exceeds 1 million miles because the repairs after a certain period are 25-35% greater than at an early stage. See our transportation industry coverage and benefits associated with the product. New equipment you can have an option of securing additional warranty to keep your mind at ease. Also, you can depreciate the expense against your income versus having a fully depreciated asset that doesn’t provide any tax savings.
It’s time for businesses to save their hard-earned cash. Free up capital and choose equipment financing as one of their main sources for cash. At Creditfy, we use technology that enables us to provide quick loans regardless of credit score and condition of the equipment. With our fast funding process, we can deploy the funds to you with 1-2 business days after receiving an approval.