How to Start Your Search for Equipment Financing
When it’s time for your business to replace old or broken equipment or purchase new, you’ll likely need to look into financing to make that happen. If you’ve never secured an equipment loan, there are some things you should consider before you get started.
Your Equipment Needs
When you meet with a banker, they will want to know how much equipment you’re looking to purchase and what you’re going to need it for. Before you make an appointment to go over your finance needs, do a thorough investigation of what exactly your equipment needs will be, and the write those needs down. Be as detailed as possible— if, for example, you need to upgrade a piece of equipment because the cost to repair your existing one would be too costly, go into detail with a cost analysis. The better you can paint a picture for your banker of what exactly you’ll need and how you’ll use it, the more likely you’ll be able to secure the full amount of your financing request.
It’s important to choose a financial partner who understand your industry and needs. You should do a comparative analysis of the local banks in your area to see what type of industries they work with, then talk with your banker to assess their understanding of your industry. The better they understand your business, the more likely they’ll be willing to work with you to ensure your equipment financing process is a smooth success.
Know What you Can Afford
Before putting in a loan request, you should understand how much debt you can afford to safely take on. Calculate your total payments and any other costs such as closing fees in addition to your monthly business expenses. You shouldn’t take on more than you can afford or you may risk putting your loan into default. If you aren’t sure how much you can afford, you can discuss that during the loan application process. You should be prepared to have a candid discussion with your lender about your total monthly expenses and income to help determine how much you can feasibly take on without it being too much of a burden.
Understand the Loan Process
As with any loan, there will be certain terms and conditions you must adhere to when you secure financing. You should understand the terms of your loan, including the interest you’ll owe, your monthly payment and the length of your repayment term. If there’s anything you don’t understand or need clarification on along the way, be sure to ask your banker before you sign on the dotted line.
Don’t let the idea of securing equipment financing be intimidating. With these tips, you should be able to secure the equipment financing you need