Equipment financing is a very specific sort of business loan designed, as the term implies, to facilitate the purchase or replacement of essential equipment. What this looks like can cover a fairly wide range, depending on the industry.
An ambitious property development partnership, for example, may use a construction equipment loan to purchase additional backhoes or a larger excavator, or they may simply need a few more heavy-duty company trucks. An agricultural landowner scrambling to remain competitive might seek farm equipment financing in order to facilitate her investment in the latest high-tech harvester, a newer windrower, and maybe a larger baler. A growing communications business may take out a commercial equipment loan in order to upgrade and add more phones and computers, all connected to and controlled by a more efficient server. Next door to them is a small manufacturing business which is finally taking off. They’ll soon need a machinery loan to substantially update their factory if they’re going to keep up with the increased demand.
The equipment in question need not be so specialized, of course. Almost any business needs reliable technology – computers, copy machines, and the ability to communicate with customers. Commercial equipment can be almost anything tangible that your business needs to survive and grow.
Whatever your business, the right equipment can be essential to your productivity, your growth – maybe even your survival. Even if you have the resources to purchase new equipment outright, such dramatic expenditures can disrupt your cash flow and become obstacles to your productivity rather than aids. Well-planned, longer-term equipment funding allows you to secure the machinery or technology you need while paying for it in smaller structured amounts over time. As your business grows or productivity increases, you’ll be able to use the profits made possible by your purchase to help pay off the loan itself.