Is new equipment procurement in the near future for your business? Have you looked into the different methods of financing thus far? The bank is one option for you but there are many Alternative Commercial Lenders that have programs not offered by the bank which can make the best solution more complicated to determine.
If you are like most company owners you will first look to your local bank or credit union for financing the acquisition of your new equipment? Is this the most prudent manner to handle the purchase? Most often just going to your bank is not the best answer. It may or may not surprise you to find that Equipment Finance Companies will have lending options that will work better for your company that will not involve you having to offer nearly the amount of security that a bank would typically seek.
What is the most significant difference between the bank and the Alternative Commercial Lenders?
Is it best to do a straight buy for the procurement? Your accountant would be the expert you need to consult with to determine which structure is best as there may be tax implications when looking at the options of depreciation versus expensing the entire payment but with the options in the market, you will be able to choose which is best for your situation. Per the previous disclaimer, this article is not intended to give tax advice in any manner, it is meant to inform of options, but you may be able to expense the entire equipment finance payment in the year that the payment was made, rather than having to carry the depreciation over several year as allowed by the tax and accounting guidelines. Most of the time when you have to expense the purchase of an item of equipment, you will need to spread the payments over more years than the payments you are making. With a lease, you can usually expense the lease payment in the year your make the payments for a more immediate benefit to you tax wise.
There are very few limitations to the availability of Equipment Finance options based on industries so whether you are looking for trucks, computers, buildings, boats, radio equipment or machine presses you will be sure to find choices. Your company’s needs should be able to be met due to the sheer number of Commercial Funders available to assist your business regardless of what industry you are in or what equipment you are in need of.
As you may expect, the finance rates for Commercial Equipment Financing do vary quite a lot. As with most Alternative Commercial Lenders’ Programs the credit risk it the most important factor which takes into consideration the credit profile of the proprietors of the enterprise as well company itself. After credit ratings are taken into consideration, the next item to be considered is the amount to be financed. Most Alternative Commercial Lenders do have minimum deal sizes due to the cost of doing business as their are certain fixed costs associated with the transaction as would be expected. As this is the case the general minimum amount that is considered acceptable would be $5000 but do keep in mind that there are many lenders that have minimum required transaction sizes higher than this.
Unfortunately not all regions do have Commercial Equipment Lenders that service them. There are jurisdictions that exist in the world that Commercial Finance Companies just will not do business in due to elevated risk. In cases where there are no Alternative Commercial Lenders, your only real option very well may be the bank where you can seek traditional financing for your company.
In closing, should you be intending to add equipment for your company you do owe it to yourself and your company to look into the various options available at Alternative Commercial Lenders today.
Using your precious cash reserves for purchasing equipment may seem like a prudent thing to do and if you can afford that, good for you, just be careful not to leave your company strapped for cash if collections do not come in as planned.