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Growing your small business takes a lot of soft skills like creative thinking, relationship building, and organizational development. Small business owners use these skills to solve problems, manage employees, and attract new customers.

Sometimes, however, expanding a business also takes hard assets. A contractor may need new earth moving machinery. A retail store might need state-of-the-art computers to implement a new point of sale system. A restauranteur may need to replace broken kitchen equipment.

Even if your small business has been in operation for a long time, purchasing equipment can be a big decision and a financial challenge. On the one hand, buying the needed equipment can help you serve more customers and generate more revenue. On the other hand, the high price of new equipment may stretch your finances too far and put your expansion goals just out of reach.

If you are a small business owner facing this dilemma, then equipment financing might be a good option for your business funding needs. Equipment financing is a loan that helps small business owners purchase new business equipment and allows them to use that equipment as collateral. ValueOne has helped many entrepreneurs take their businesses to the next level using equipment financing and we can help you, too.

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Equipment Financing

Growing your small business takes a lot of soft skills like creative thinking, relationship building, and organizational development. Small business owners use these skills to solve problems, manage employees, and attract new customers.

Sometimes, however, expanding a business also takes hard assets. A contractor may need new earth moving machinery. A retail store might need state-of-the-art computers to implement a new point of sale system. A restauranteur may need to replace broken kitchen equipment.

Even if your small business has been in operation for a long time, purchasing equipment can be a big decision and a financial challenge. On the one hand, buying the needed equipment can help you serve more customers and generate more revenue. On the other hand, the high price of new equipment may stretch your finances too far and put your expansion goals just out of reach.

If you are a small business owner facing this dilemma, then equipment financing might be a good option for your business funding needs. Equipment financing is a loan that helps small business owners purchase new business equipment and allows them to use that equipment as collateral. ValueOne has helped many entrepreneurs take their businesses to the next level using equipment financing and we can help you, too.

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What You Need to Know About Equipment Financing for Small Businesses

Equipment financing is a fast way to obtain business funding. Speed is just one the advantages equipment financing offers to small business owners. Equipment financing loans can be approved in as little as two days. Another advantage is that you can fund up to 100% of the value of the equipment that is purchased.

There are a few disadvantages to consider before seeking equipment financing. First, the equipment you purchase with the loan may be obsolete by the time the loan is paid back in full. Second, you might need to account for the depreciation of equipment and this prevents you from deducting the full cost of the equipment from your taxes each year.

The cost of equipment financing is another factor to keep in mind. On the one hand, financing an equipment purchase makes it easier for you to get the equipment you need for your small business and pay back the loan in affordable installments over time. However, when you add in interest to the overall cost of the loan, you end up paying more for the equipment than if you purchased it outright with cash.

In some cases, leasing equipment may be a better option for your small business. The difference is with a lease you have to return the equipment once the lease term has ended. Some business owners prefer leasing because they only need the equipment temporarily. With a loan, you keep the equipment after you have paid back the loan.

Qualifying for Equipment Financing

Most small businesses with consistent revenue will qualify for equipment financing. The amount of money you can borrow and the interest rate you’ll be charged depends on several factors. These include the value of the equipment you are purchasing, your credit score and the financial history of your business.

A weak credit score doesn’t automatically eliminate you from equipment financing as an option because the loan is secured using the equipment as collateral. If the equipment has a high enough value and can be resold in the event you cannot pay back the loan, the lender will be less concerned about a less than perfect credit score.

Still, there are some minimum qualifications a small business must meet in order to apply for equipment financing. You must have a credit score of at least 600. Your business must be in operation for at least eleven months and generate at least $100,000 in revenue annually.

In addition to your credit score, your lender will also require certain documents be included with your application. These include financial records such as business tax returns and bank statements and identification such as a current driver’s license. You’ll also want to provide a written quote for the price of the equipment you’d like to purchase for your small business.

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