6 Tips for Equipment Financing
Sometimes lenders make it seem that you need them more than they need you. Don’t fall for this myth. Here are six things you should keep in mind when applying for equipment financing.
1. Choose a Lender That Wants a Long-Term Partnership
Look for lenders that see you as a valuable partner and want to help you grow your company. They may provide 100% financing or answer all your questions. The better the customer service they provide, the better the chance you’ve found a financing partner for life.
2. Put Down Money If You Can, But Don’t Worry If You Can’t
If lenders try to convince you that the only way to get approved for equipment financing is with a substantial down payment, don’t believe them. There are plenty of loan options for equipment that offer financing with zero money down. Of course, putting money down can be advantageous, because it lowers the amount of remaining debt and interest.
3. Don’t Risk Collateral You’re Not Prepared To Lose
Many banks want you to put up tons of assets as collateral for an equipment purchase. However, you should never sign anything that makes you feel uncomfortable. If a bank asks you to risk too much as a business owner, just walk away. Good lenders are willing to accept some risk themselves, and the equipment itself should be sufficient collateral for the loan.
4. Find a Company That Speeds Up Approval
Loan approval should never take an eternity, unless you’re dealing with a government-backed loan. Lenders that have experience with equipment financing should make the process quick and easy. In fact, approval should never take more than a week. Some lenders get you ready to go in a few hours or days.
5. Prepare Financial Statements, But Don’t Be Afraid of Applying Without Them
Having convincing financing statements makes it easier to get approved, but startups can generally find equipment solutions too. If you don’t have extensive statements, let your excellent personal or business credit speak for itself. You can also provide an energetic presentation showing how you’re going to use the equipment for your business.
6. Remember That You Make the Final Call on What Equipment To Buy
Never let a banker tell you what equipment is best for your business. You know what you need better than anyone. If you find a great deal on high-quality equipment from a brand you trust, feel free to insist.
For great equipment financing, it’s worth the effort to find the right lender for your business. You have the power to pick and choose, so don’t feel obligated to waste time jumping through hoops. If one bank gives you the run-around, look for a different one with more experience in business equipment.
