Needing new equipment, machinery, and related gear to support bolstering company operations is generally viewed as a good sign that your business is moving in the right direction. After all languishing, sitting-still machines can signal a business’s downfall. So when a company knows it needs to secure new gear, they know there is a growing demand for their product.
Commercial Equipment Financing Is More Flexible than Term Loans
Equipment financing, however, can be complicated and expensive. Depending on your company’s financial situation, securing a traditional term loan can be difficult. Corporate banks often require businesses that apply for term loans to be established for at least five years. They may also require year-after-year growth, certain monthly or yearly revenue, and other stringent criteria that are difficult to meet. For better or worse, many banks are reluctant to loan to seasonal types of business such as construction equipment financing. Even businesses with all their ducks in a row are finding traditional financing options to be limited these days.
Equipment Finance Is the Preferred Option to Fast-Growing Companies
Yet those seeking business equipment financing, anything from construction equipment to medical equipment financing are having success with third-party financial institutions such as invoice factoring companies. Commercial equipment financing differs from standard loans in that the loan is secured by the piece of equipment itself. Generally, no other collateral is required for equipment finance. This does mean that if you are unable to satisfy the terms of your contract, the financial institution could seize and take over ownership of the actual equipment or machinery.
Depending on your situation, you could also secure a competitive rate for industrial equipment financing because many of these third-party finance institutions have a number of capital resources available to them that banks simply don’t have. With commercial equipment financing, you can get your cash quickly so you can move ahead with your purchase in no time.