Your bakery has been in business for the past four years. It is a quaint little shop in the historic downtown area with delightful smells that greet passersby at the entrance. All is well until one crisp fall morning, your commercial oven stops working. You call a repairman and learn the unfortunate news that the heart of your shop needs to be replaced. A quick Google search startles you, as a similar model starts at $9,000. This will be the first major purchase for the bakery, and one that will require financing. You need to act fast because fall is the busiest season of the year for your business.
Purchasing equipment is a reality for nearly all businesses. Needs can range from computers to heavy machinery. Whether the expense is expected, or the result of an unfortunate mishap, financing may be the only way to keep your company moving forward. Two popular options available include equipment financing and leasing.
Equipment Financing/Leasing
Equipment Financing allows business owners to gain access to commercial vehicles, medical equipment, technology products, machinery equipment and more. This is a great option you can avoid substantial cash outlays and depletion of business credit lines and at the same time boosting your growth. Equipment Financing products and services can be customized to meet specific business needs with flexible payment structures created to let businesses to start generating revenue. For example full payments may be delayed or stretched out for up to 60 months.
Considerations:
You can get equipment financed in is as little as 24 hours for non-titled equipment and 5 days for titled. Simple credit qualifications are available with 12-to-72-month payback terms.
Additional, flexible financing options available such as:
- $1 Buyout Lease or Equipment Financing Agreement (EFA).
- Net Terms (Buy now and pay later. Net 30, 60 or 90 days).
- Fair Market Value (Get a lower lease payment. At the end of the term, purchase the equipment, or return it).
- Sales leaseback options allow lenders to purchase borrowers equipment, then lease it back when needed.
- Equipment leases can be also based on real estate. This option is ideal for those with a good credit score or those who are homeowners. For example, a trucking company can use equity and collateral as a down payment for trucks.
Additional Considerations:
- Rates and terms vary according to credit, time in business, industry type, and type of equipment being financed and could go as low as 4.99% or as high as 35%
- There is an option to trade in or trade up when the term is over
- Modifications are either prohibited or must be approved
- Service agreements are typically offered
- Generally, requires a smaller down payment
- Businesses that use leased equipment may be able to take advantage of payment deductions on their taxes
- No collateral is required
Take the following steps when considering whether to opt for a loan or a lease:
- Determine your Budget.
After making the necessary calculations you conclude that your bakery can afford to cover the payments for up to $25,000.00. However, you need a funding for just $11,000 to cover the cost of the oven, installation, taxes, and warranty. You decide to borrow no more than what you need.
- Decide how long you will need the equipment.
You can use a commercial grade oven for as long as you have your business or until it gives out. Typically, this would mean keeping it permanently once it is installed. However, your business is gaining in popularity after you expand into the wedding cake specialty. You have plans to move to a larger location to handle the orders. You do not intend to take any equipment from the existing bakery.
- Decide if you will need upgrades.
In your fifteen years of baking experience, you have never needed to upgrade an oven and do not foresee needed to do so in the future.
- Prepare some brief introduction about your business and equipment needed.
These steps can also be broken down into what is considered a “4-liner” or business introduction that takes the place of a formal business plan. It includes:
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- Business name & description
- Explanation of why the equipment is need (increase revenue, additional stream of income, new business, etc.)
- Length of time your business has been established.
- Equipment details (article, item number, asking price, etc.)
This information helps underwriters understand the most significant portions of the request and focus on solutions without spending valuable time sifting through supporting documents.
After making the above considerations, you decide to go with a leasing option from Lending4Biz because you want to have flexible payment options and willing to invest saved cash to your business. They offer up to $150,000 in funding with 12-to-72-month payback terms. This fits well within your financing needs. They also can get you financed quick, usually within 24 hours, so you are able to get your new oven ordered and installed within days, which allows you to reopen your doors sooner than you expected.
Lending4Biz works with trucking companies, repair shops, medical clinics, and manufacturing companies just to name a few. Contact us to see how we can help you with your business equipment needs. Examples of equipment funded to businesses including: doctor’s office ($50,000 for 60 months), trucking company (Kenworth T680 $75,000 for 60 months), excavation company ($50,000 for 36 months), Decal Company (GR-640 Cutter $31,480 for 60 months), Bobcat E35 ($33,000 for 60 months).
Let’s get some funding for your business!
