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Where Can I Find Equipment Financing Loans?

by Equipment Financing

Luckily, banks and credit unions aren’t the only place you can find equipment financing loans. Times have changed, and now you have several options to finance the essential business equipment your business or startup needs.

Equipment Financing Loans from Banks

Banks and credit unions are still options for finding equipment financing loans, but too often they are not in reach for some business or startup owners. Unless you have good or excellent credit, financing equipment through a traditional bank is next to impossible since they typically approve applicants with top-tier credit scores. Even if your credit score is up to snuff, you face a lot of paperwork and long wait times for final approval. If you have an urgent need for business equipment, don’t have a sizable down payment, don’t want liens placed on other business or personal assets or have credit blemishes, you’ll be disappointed with a traditional bank’s equipment financing.

Equipment Financing Loans from Vendors

Equipment vendors, when faced with fewer sales, began offering equipment financing loans to customers. This gave business owners a way to obtain essential equipment without going through normal bank channels. Vendors create equipment financing programs through direct lenders, like Global Financial & Leasing Services (GFLS). These programs benefit both buyers and venders. Buyers can explore financing a higher priced piece of equipment rather than settle for less expensive machinery priced within the bank’s approved amount. Vendors are able to sell equipment to buyers who wouldn’t otherwise qualify from a traditional bank. With vendor financing, consumers have more flexibility, especially when the vendor works with a lending partner committed to closing sales.

SBA Equipment Financing Loans

The Small Business Administration (SBA) is a federal organization that has low-cost, government-backed loan programs for small business owners. The SBA backs a portion of the loan a small business owner obtains from lenders, such as banks and nonprofits. SBA loans are less risky for the lenders, and they can come with lower interest rates and longer terms for borrowers. For example, current interest rates for SBA loans in September 2022 are:

  • SBA 7(a) loans: 7.75% – 10.25%
  • SBA CDC/504 loans: Approximately 5.39% – 5.46%
  • EIDL loans for COVID relief: 3.75% for for-profit businesses and 2.75% for nonprofit businesses.
  • PPP loans: 0% if forgiven; 1% if not forgiven.
  • Maximum rates for other SBA disaster loans: 4.00% with no credit available elsewhere, or 8.00% with credit available elsewhere.

SBA loans are an option for business owners with excellent credit who are growing or expanding business with equipment. But, the application and approval process can take months, and the majority of applicants are denied due to bad credit, character issues, lacking collateral, insufficient revenue or capital to repay, and inability to repay due to other outstanding loan payments.

Financing Equipment Through Sale/Leaseback

Financing business equipment through a sale/leaseback is like using your home equity for a purchase. An equipment sale/leaseback loan is an option if your business owns assets like trucks, machinery or construction equipment.

The equipment is sold or leased, but retained for business use. Because the transaction is secured by the equipment, this loan type is relatively easy to qualify for, and it can be structured so you can own the equipment at the term’s end, ranging from 24-60 months and the payments are tax deductible. Sale leasebacks often require an equipment appraisal from a Certified Asset Appraisal firm, and the lender often lends to advance a percentage of the Force Liquidation Value of the appraisal.

Equipment Financing Through a Direct Lender, Like Global Financial & Leasing Services

Global Financial & Leasing Services (GFLS) is a direct funder, providing funding opportunities that typical banks don’t. In certain situations, we can use our connections to numerous banks and institutions to offer you the best financing solution for your credit profile. In the end, you get the right financing for your needs and access to the funds faster.

Unlike big bank applications, our process is simple and streamlined so you have a decision often in 24 hours or less. Talk to one of our equipment lease financing experts at 480.478.7400 or start your application today.

What is Machinery Equipment Financing?

by Equipment Financing

The textbook definition of equipment financing is a lease or loan used to obtain equipment for a business. Adding machinery to the term only means the equipment obtained is machinery or manufacturing equipment of some sort. There is equipment financing available for all industries, such as medical, restaurant, printing and more. Equipment financed is usually essential to a business’s operations and considered an asset, and therefore doesn’t include real estate because property is obtained via a commercial real estate loan.

Why Business Owners Need Access to Machinery Equipment Financing

If you follow any corporate moguls on social media, listen to business-related podcasts or read finance news, then you know how very rarely business owners and leaders contribute their success to luck alone. Maybe a few lucky breaks here and there or being in the right place at the right time, but success comes from making smart and strategic business decisions. Often, business decisions are based on whether or not you can afford to make them.

Regardless of how strong cash flow is, having access to equipment financing is especially important for business owners in industries that require machinery and/or manufacturing equipment because their cost runs tens to hundreds of thousands of dollars.

Having a source for equipment financing is just as critical for startup entrepreneurs who need machinery equipment financing to get their business off the ground.

Either way, considering the high price of machinery and manufacturing equipment, financing a purchase or lease means taking on a monthly financial commitment—one that will help your business grow and generate a level of revenue that more than covers the lease or financed purchase payment.

Machinery Equipment Financing Vs. Equipment Leasing

If you need to finance your machinery or manufacturing equipment, you have two options. Take out a loan to purchase it or lease it. Making the best and smartest decision for your business and circumstances depends on two main factors:

  1. Your personal and business credit rating because those affect your ability to qualify for financing
  2. The useful life expectancy of the equipment you’re financing

Let’s take a closer look at these factors.

If you have a good or excellent credit score, equipment financing is far easier. However, if your credit score is 640 or below, you will find a limited number of lenders willing to finance your machinery or manufacturing equipment.

LEARN MORE: Can I Finance Equipment with a 640 Credit Score?

Machinery and manufacturing equipment are workhorses designed to last for years with proper maintenance and service. So, the useful life expectancy is long. Think in terms of useful then to your business. Will you keep the equipment for the long haul? Then, financing its purchase may make the most sense. Will you be upgrading soon or using it for just a handful of jobs? Then, equipment leasing might be the way to go.

LEARN MORE: Your Approach to Financing an Equipment Lease Matters

Talk to One of Our CLFPs About Machinery Equipment Financing for Your Business

Global Financial & Leasing Services (GFLS) has Certified Lease and Finance Professionals (CLFP) on our team to help you choose and get the equipment financing that’s right for your business goals and finances. CLFPs must pass various tests and meet strict professional and ethical requirements to become officially certified, making them more reliable partners than non-certified lenders.

CLFPs are the best of the best in equipment financing. They demonstrate extensive knowledge of the field, and also, have never been involved in any questionable transactions. When you work with a CLFP like those here at GFLS, you know that your lender is competent and has your best interest in mind.

GFLS can finance almost any business seeking to acquire equipment. With our in-house funds and relationships with over 200 private label and public banks, we have the ability to finance those who have been turned down by the banks due perhaps to prior bankruptcy, student loans, tax liens and bad credit. Want to learn more? Let’s talk about the possibilities. Or, get started today by filling out an online application.