Sometimes, owning a small business comes with a need for rather large equipment. This equipment can be expensive and in most cases, some kind of financing is needed to purchase them. Equipment loans make it possible for businesses to get the factory machinery, vehicles or other pricey items needed to successfully run a business. Just like there are multiple types of small businesses in the world, there are a variety of equipment financing options out there to fit every kind of financing need.
SBA 504 Loan
The SBA 504 loan is a type of financing most suitable for businesses with profits under the 15 million mark. It comes with relatively lower interest rates than some other types of loans and requires a minimum credit score of 600. The repayment terms are usually 10 or 20 years. Where this SBA loan is great for those seeking low-interest rates, it’s might not be the best for a business which needs the cash sooner rather than later. The average time to funding can run anywhere from 5 to 8 weeks.
Business Line of Credit
Like the SBA loan, a business line of credit also requires a credit score of at least 600. On top of that, businesses who are seeking a line of credit also need to have been in operation for at least 6 months. The interest rate on this type of equipment financing can really vary and, depending on a number of factors, can range from 7 to 37 percent. They also generally have a borrowing limit of around 1 million dollars. The upside to this type of equipment financing is that these loans are usually funded in as little as two days, making them something to consider for businesses who can’t wait for an SBA loan.
Finally, and equipment loan provides businesses with the funds for their large equipment using the equipment itself as collateral. The average time to funding is two business days and their interest rates are similar to the rates of a business line of credit. Equipment loans require a minimum 600 credit score and at least one year of operating history. These types of loans are best suited for newer businesses who need new equipment for growth.
Most small businesses with expensive equipment need some time of loan to upgrade and grow their business. Small business equipment loans make pricey items more easily attainable. Depending on the type of business, there are numerous equipment financing options available to meet your business’s needs.