Companies often choose equipment financing for new machines even if they do not need to do it, and there are a lot of good reasons for that. If your small business is considering options for getting new machines into the shop, you should consider all of the benefits of owning the equipment without needing the cash up front.
- Minimize Your Financial Risk
When you put a new machine in your shop, you are taking on a risk, because it is only worthwhile if that machine makes you more money than it cost you. Sometimes even the best-run businesses wind up with equipment that is a net loss, and when that happens the strategy is to cut losses however you can. If you paid cash, that means you are stuck with whatever you can get by selling it.
Financing gives you another option. It’s not one the lender will like, but realistically your business is worth more than your credit score. If you walk away from a loan and surrender the equipment, you are only out your down payment and your payments to date, not the entire purchase cost.
- Reach Your ROI Faster
Just as an equipment financing deal can minimize your financial risk by offsetting your costs into the future, it can also accelerate your path to profitability. You just need the machine to cover its down payment costs and then generate more revenue than it costs to operate and maintain, and that is easier when you only have a fraction of the machine’s value to earn and a few hours a month of operation covers the costs of financing.
Using this method means understanding how much you can make and how quickly you can line up customers, but it is a way to speed up your profitability and your growth when used correctly. The lower your monthly payments, the easier it is to succeed. Keep that in mind.
- Negotiable Down Payments and Loan Terms
Traditional bank loans have a narrow range of down payment options and loan terms, but they are not your only path to equipment financing. Private financing companies usually have flexible down payment and loan term options that let you customize your financing to fit the needs of your business.
That can help when you want to lower interest rates as well, because bigger down payments on shorter loans cost less. Start browsing your options today to learn more about financing your next wave of equipment purchases.
