Many businesses need hard assets before they can start. This includes items like commercial ovens, desks, shelves and displays, vehicles, and manufacturing equipment to name a few. It can be especially difficult for a business to attain these assets before it opens and has steady revenue. The same goes for assets needed to grow a business and take it to the next level. However, seeking financing on such items can help. Equipment financing, also known as equipment loans, means taking out a loan specifically to purchase hard assets for your business. Unlike many other types of business loans, the equipment itself acts as collateral. This makes this type of loan more attractive and accessible to those just starting out.
What is equipment financing?
In the simplest terms, equipment financing is a loan that you can take out with the sole purpose of purchasing equipment for your business. Since the equipment itself usually secures the loan, if you default on payment, the financing company will take the equipment away. After, they’re able to sell it to recoup some of its costs.