Equipment financing is a financial arrangement in which a business obtains funding specifically to acquire the necessary equipment for its operations.
Due to the nature of businesses having various costs it may be a variable option for a loan to be taken out Instead of making an upfront purchase with cash.
Equipment financing allows businesses to spread out the cost of equipment over a period of time while still having access to use.
Types of Equipment Finance
There are several different types of equipment finance plans, however, we have named the most popular options as being
- Secured Loans
- Equipment Leasing
- Hire Purchase
Secured Loans – Simply put this is when A secured loan means a business borrows money by offering assets such as property or equipment as security to the lender
Equipment Leasing – Equipment leasing allows businesses to use equipment without owning it outright. In this arrangement, the business makes regular lease payments to the equipment owner (lessor) in exchange for the use of the equipment
Hire Purchase: Hire purchase agreements allow businesses to acquire equipment by paying in installments over time. During the hire purchase period, the business essentially hires the equipment but has the option to purchase it at the end of the agreement by paying a nominal fee.
List of Business of that use Equipment Loans
- Cafes
- Events
- Offices & IT Equipment
- Bar & Pub
- Agriculture and farming
- Laundry and dry cleaning equipment finance
- Manufacturing and heavy industry
Benefits of equipment financing
Equipment financing offers several benefits to businesses:
Preservation of Working Capital: To allow for funds to be allocated towards other operational needs such as marketing, inventory, or hiring additional staff secured loans will help with ensuring capital in the business can be spread to all different areas.
Flexible Payment Options: Businesses can choose a repayment schedule that aligns with their cash flow, such as monthly or quarterly installments, making it easier to manage their financial obligations. Both parties involved agree on the option ( we discuss this later on)
Access to Upgraded Equipment: With rapidly evolving technology, the equipment can quickly become outdated. Equipment financing enables businesses to acquire the latest and more advanced equipment without bearing the full financial burden upfront. This allows businesses to stay competitive and maintain operational efficiency.
Tax Benefits: In some jurisdictions, equipment financing may offer tax benefits. The interest paid on equipment financing loans can be tax-deductible, reducing the overall tax liability for the business.
Preservation of Credit Lines: By utilizing equipment financing, businesses can preserve their existing lines of credit for other purposes, such as emergencies, expansion, or working capital needs. This keeps credit lines available for future opportunities or unforeseen circumstances.
How do I get an equipment-secured loan?
For your equipment loan look no further than Funding Guru.
Funding Guru is a business finance provider and adviser to UK firms looking for funding solutions to help them grow and remain financially strong.
Funding Guru is primarily a lender, having loaned more than £500m to UK businesses since 2014. We typically loan anything between £100,000 to £1,000,000 but consider all funding requests of most sizes.
How long can you finance equipment?
The length of time in which you can secure a loan will depend on several factors, most importantly the loan will depend on how expensive the piece of equipment is.
Another determining factor is if the piece of equipment will lose a significant amount of its value in years to come. Loans can be as little as 1 year up to 7 years. This will be agreed upon by the willing lender and business.
We will be able to discuss this in further detail – on the Funding Guru Contact pages
