There are many reasons why a growing or established business may need to seek funding to buy machinery. The funding reasons may range from bridging a temporary cash flow situation to a long-term objective like funding for expansion.
Top Reasons Companies Seek Equipment Financing:
Purchasing machinery and equipment
Buying a building
Purchasing of equipment and machinery is perhaps the most common for seeking funding. Here, the cost of the equipment or machinery guides the business on which financing options to consider. Equipment and machinery requiring small capital outlay, credit card facilities, term loans or overdrafts are often available. However, substantial capital spends for equipment are usually set for funding by dedicated funders. One such equipment is the debris loader whose purpose is to mount debris in a truck bed or tow-behind trailer.
A debris loader helps you finish any yard or lawn service job quickly. While you whack, prune, trim and mow, you keep creating different styles of waste. Once you consolidate this waste using leaf blowers, litter vacuums, tow-behind lawn sweepers or other contraptions, you’ll need to put it into one place before dropping it off with waste management or transferring it to a compost pile. While you can move the debris from the ground to your trailer or truck by hand, you’ll end up using a lot of time and energy.
Constant cleaning, especially of large property, requires time and energy – and if you run a lawn service, time and energy equal money. Debris loaders make the final step of lawn cleanup significantly easier.
Existing Asset Financing Options
You may have a few asset financing options depending on the type of equipment and machinery you wish to purchase. Most asset financiers have three fundamental ways they structure their loan: financing an outright purchase, easing options, or rental agreements. With this information, it is imperative to know which one best suits your business.
Financing for a Purchase
It is usually done via a prime linked loan whereby you repay the lender in equal installments over an agreed time. These installments include interest, and they can be paid within 12 months or even more than five years depending on the lifespan of the acquired asset. The lender still claims ownership of the asset whilst you’re still repaying the loan and has the legal right to sell the asset and recover any outstanding amount if you can no longer payback. Maintenance and any running costs are your responsibility once you buy an asset using this option.
This option is most suitable in instances where the equipment or machinery is required on a temporal basis. Unfortunately, rental prices can sometimes be high since the rental company has to realize an ROI and make a profit from their investment. Renting works well for expensive pieces of equipment such as cranes and only required for a short time. It may not be feasible for a lawn service company to rent a debris loader since rental costs are expensed on income statements each time you rent one.
This arrangement allows you to possess an asset for an agreed period with certain payment terms. It comes with several terms and conditions since you will be using the asset for a more extended period than renting. Sometimes there are penalties if either party; lessee and lessor violates any of the agreed terms and conditions.
When seeking a funding option, you need to do a proper financial analysis before making a decision. While an asset will boost your business in some ways, remember that depreciation, maintenance, and running costs are tax-deductible and can significantly impact your cash flow if you have an inadequate cash outlay upfront.
Consider whether the asset has a good resale value since lenders are keen on this. An asset with a good resale value has lower collateral amounts. Secondhand equipment is obviously a proper consideration to think about. However, you need to understand that financers are typically not readily willing to fund secondhand equipment if they are not sure of its resale value in case you fail to repay their loan.
Similarly, your credit scores matter in determining your payment. While it may be difficult to access funding if you have bad credit and have minimal down payment or collateral, it’s still not impossible to obtain financing.
At First Capital Business Finance, we offer different categories of finance programs for good or bad credit scores on heavy pieces of equipment. Check out our list of eligible heavy, new/used equipment that qualifies for bad credit financing on our website.
Get Pre-Approved for Debris Loader Financing Today with First Capital!
At First Capital Business Finance , we provide you with assistance and facilitation of such loans aimed towards the growth of your company. We stretch across different industries, small, medium or large-scale companies. If you’re in need of debris loader funding or any other equipment funding, get in touch with us on 888-565-6692 or through our online platform.
First Capital Business Finance is committed to helping you meet your cash flow needs to grow your business. We serve small and middle market businesses and large corporations with range of loan and financing options