Equipment Loans -Needs and importance.
Equipment Loans -Needs and importance.
Each lender will have different terms, but in general, with a loan, you can finance around 80% of the total purchase price of the item. When choosing to buy your equipment and finance through a loan, you own the item from day one. A down payment of around 20% is generally required for most small business equipment loans. The collateral for the loan is the item or items you purchase with the equipment loan.
Importance of Equipment Loan
· To replace old equipment
· To update older or out of date equipment
· Add to your existing equipment inventory
Business Equipment Loans and how to obtain it
Havelet Finance Limited required Excellent credit most time before approving an equipment loans to borrowers. After all, it’s an investment in your business and in your business’ growth and revenues. You may want to consider applying for a loan at the bank with whom you currently do most of your business. Or you may want to consider a nontraditional lender such as Havelet Finance Limited an online lender which offers assistance for small and online business owners in need of fast access to capital to grow their business.
If you have had strong sales, but struggle with little or bad credit, a business loan may be a particularly good option for your small or online business. Getting the capital you need when you need it can mean the difference between the success or failure of your business.
Traditional lenders, such as banks, are often reluctant to extend traditional equipment loans to small or online businesses with poor or bad credit. Such businesses will be deemed “too risky” and will have great difficulty in securing a traditional bank loan for their business needs. This can be a problem for many small or online business owners who need the capital to purchase, replace or repair outdated or broken equipment. This is where a business loan can come in handy. A business loan gets you the money you need at a fast turnaround time so you can continue to run the day to day operations of your business.
The Steps to Getting an Equipment Loan
As your business grows, you will need to replenish your inventory, provide daily, monthly, and annual maintenance on key equipment, and ensure timely delivery of your product or services. Equipment loans are a vital resource to the small or online business owner.
Good credit Scores
Had late credit card payments? Defaulted on some loans? A history of bad credit? All of these things will work against you when you apply for equipment loans. Most lenders will not extend any kind of loan to a small or online business that is deemed too risky. One of the most important — if not the most important — small business loan requirements is ensuring your credit is excellent. Preparation is key. Do your research ahead of time. Know your FICO score — a summary of your credit risk which lenders use to assess things such as whether or not to extend credit and if so, at what interest rate.
When meeting with potential lenders, come prepared to show not only your business credit history but your personal credit history as well. Got credit card debt? A few late car payments? Student loans in default? These kinds of things will delay if not halt the equipment loan approval process. Excellent credit is a fundamental aspect of small business loan requirements. Work aggressively to clean up your credit, fix any credit reporting errors (*Note: credit reporting errors do occur. Take time to read your credit reports thoroughly to ensure accuracy. Report any discrepancies immediately).
A solid business plan.
Lenders — Traditional bank lenders and some nontraditional lenders — will look to your business plan as a roadmap of your future success. Identify your business. Describe your product or service. Detail your current cash flow system and project an aggressive, yet a realistic set of goals for your future business growth. Identify your target market, the socio and economic demographics of your primary market and then explain in detail how your product or service will fulfill a need within this market. Finally, summarize your entire business plan in a few paragraphs at the very beginning of your plan and call it the “Executive Summary.” This will give lenders a good synopsis of what your business is all about. A good business plan does not have to be pages and pages in length. However, it should be thorough and well thought out. There are many templates and examples of business plans online. Find one that works for you and implement it as part of your strategy to secure your equipment loans.
Updated Personal CIS.
Even though you’re not applying for a job, a personal resume is a great resource to have when applying for equipment loans. Lenders of all kinds — traditional bank-based as well as nontraditional lenders — look to a personal resume for character traits that will support the small or online business plan. They want to see the person behind the business. And, since you will be responsible for repayment of the loan, lenders will want to make sure you’re a good credit risk for any equipment loans issued.
Have cash flow statements at the ready.
Being able to show your money coming in and your money going out in current terms is a critical factor that most lenders require before issuing any kind of equipment loan. Get your finances in order. Hire a certified public accountant to go through your financial records. You’ll need to make sure you have both your personal and business financial statements in order and bulletproof — meaning the level of integrity in your reporting is accurate and ethical. It is one of the best indicators as to how your business is doing in the real world and it’s one of the main things lenders consider when reviewing small business loan requirements.
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