Need Equipment for Your Business? Match the Funding to the Need

Does your business need equipment?

For some companies, equipment is not optional. Vehicles, machinery, technology, tools or other operating assets may be necessary to increase capacity, replace aging equipment or support continued operations.

But before pursuing financing, start by understanding exactly what the business needs and how that purchase fits into the company’s financial position.

1. Define the Equipment Requirement

Start with the asset itself.

What equipment does the business need?

Is it replacing something that already exists, expanding capacity or allowing the company to offer a new service?

A clearly defined requirement makes it easier to understand the real capital need.

2. Understand the Total Cost

The purchase price may not be the only cost associated with acquiring equipment.

Depending on the asset, a business may also need to consider delivery, installation, training, maintenance, insurance, taxes or other operating expenses.

The financing requirement should reflect the realistic business cost rather than only the advertised equipment price.

3. Consider the Effect on Cash Flow

Equipment may help the business generate revenue, improve efficiency or increase operating capacity.

At the same time, any financing creates an additional financial obligation.

Before moving forward, consider how payments would fit into the company’s existing cash-flow position and other obligations.

4. Explore the Appropriate Financing Path

Equipment financing is one potential funding path, but it may not be the only option available.

Depending on the business profile, asset, amount required and circumstances, other financing structures may also warrant consideration.

The objective is not simply to obtain capital. It is to determine which available financing path may fit the business need.

5. Understand What Providers May Review

Qualification standards vary by financing provider and product.

Depending on the option being considered, providers may review factors such as:

Credit profile
Time in business
Annual revenue
Cash flow
Existing debt obligations
Industry
The equipment or asset involved
Supporting business documentation

No single qualification standard applies to every financing option.

6. Compare More Than the Amount Offered

If financing is available, review more than the approved amount.

Consider the repayment structure, total cost, timing, required guarantees or collateral where applicable and other material terms.

The financing should support the equipment need without creating an obligation the business does not fully understand.

Equipment Is the Need — Financing Is the Tool

A business owner should not begin by asking which loan is easiest to obtain.

A better starting point is:

What equipment does the business need, what will it accomplish and what financing structure can the business reasonably support?

EIN Business Funding provides a starting point for business owners exploring funding options for equipment and other business requirements.

Funding availability, eligibility, limits, costs, collateral requirements, terms and approval vary by provider and applicant circumstances. Pre-qualification or an initial review does not guarantee financing.

Frequently Asked Questions

Can business funding be used to purchase equipment?

Equipment financing and other business financing options may be available for qualifying equipment purchases, depending on the provider, business profile, asset and transaction.

What should I know before seeking equipment financing?

Start with the equipment required, total expected cost, purpose of the asset, timing of the purchase and how any resulting payment obligation would fit the company’s cash flow.

What may providers review for equipment-related business funding?

Requirements vary, but providers may consider factors such as credit profile, time in business, revenue, cash flow, existing debt, industry, the asset involved and supporting business information.