Modern businesses provide various services, from building new homes to manufacturing food products. What most industries have in common is the need for high-quality equipment.
Why Equipment Is Essential for Today’s Businesses
Investing money in equipment can help manufacturers increase production numbers, boost efficiency, lower manufacturing costs, and increase revenue significantly. In a different vein, modern equipment can even benefit healthcare businesses, allowing doctors and dentists to offer state-of-the-art services to their clients.
What Types of Financing Are Available for Equipment
One of the most important decisions businesses have to make is how they’re going to go about making the equipment purchase. There are a variety of options, from small business loans and conventional financing to alternative funding programs such as machinery financing and leasing.
SBA Loans
Small business loans include SBA 7(a) and 504 options. Only small businesses can qualify, and approval takes a while, but successfully getting one of these loans can lower interest rates considerably. Both 7(a) and 504 loans typically offer 15 years or more for repayment.
Heavy Equipment Financing
Machinery financing involves a loan to purchase heavy equipment. This type of alternative loan uses the equipment as collateral, lowering the overall loan requirements and the size of the down payment required. This way, even businesses with poor credit can often get the equipment they need.
Equipment Leasing
Last but not least, equipment leasing involves making monthly payments to use the machinery, not generally to purchase it. This option costs more in the long run, but it has several benefits for everyday business operations.
What The Benefits of Leasing Are
It may seem surprising that an option that has a higher cost is extremely popular, but it’s hard for businesses to resist the immense benefits of machinery leasing.
Lower Monthly Payments
Leasing generally provides more comfortable payments every month. The difference can be considerable, sometimes shaving hundreds of dollars off payments.
Working Capital Preservation
Due to having lower monthly payments, businesses have more working capital on hand. Capital is immensely valuable for operations, supporting everything from inventory purchases to payroll.
Frequent Upgrades
Leasing makes it easy to get new equipment every few years. That way, businesses stay ahead of competitors. This tradeoff can make machinery financing an incredible solution.
Sometimes, the best value is the option that helps a business generate the most revenue, not necessarily the cheapest option. When leasing enables a company to operate with healthy cash flow, it’s the right choice.
Seek Expert Assistance
At BMF Advisors, we can finance or lease equipment to you. This will improve your cash flow since you will not need a big lump sum to purchase the equipment you need. Call us to speak with one of our financial specialists. We will find a great equipment financing package for you.
