How Can Bridge Loans Benefit Your Small Business?

It’s not easy to turn your small business into a success, as any small business owner knows. Every year, one out of every twelve businesses is forced to close, with a third of small business owners citing a lack of cash as their most pressing issue. Many business owners resort to bridge loans for support during rough times since they are a quick and straightforward short-term funding solution.

 

What is a Bridge Loan?

A bridge loan is a sort of financing used by many small businesses to meet an immediate cash flow need. They’re usually easier to obtain and secure than standard long-term loans, but they’re also more expensive.

Bridge loans aren’t typically used by businesses to meet long-term needs. Instead, this form of funding “bridges” the gap between a short-term financial need and a longer-term solution. A business may, for example, intend to repay a bridge loan with future revenue or refinance with a long-term loan.

Bridge loans, unlike ordinary loans, usually have a short repayment time. Many companies provide durations ranging from a few months to five years. Lenders typically require more frequent payments, perhaps as frequently as daily or monthly.

 

A Quick Guide to Bridge Loans

• Short-term financing
• Funding that is quick and convenient
• Quicker and easier than traditional loans
• A multi-purpose cash flow solution
• Repayment period is short.
• Payment methods that are flexible

 

Bridge Loans Most Common Applications

Bridge loans are adaptable enough to be employed in a range of industries, including service and manufacturing. They can be utilized to solve almost any short-term cash flow challenge that could jeopardize a business’s long-term prosperity. We’ll go over some of the most typical scenarios in which bridge funding might be useful.

 

Purchasing a Property

Purchasing commercial real estate can be difficult, especially when several parties are competing for the same desirable location. If a business wants to land a good real estate deal, it must act promptly. Many small businesses, on the other hand, may not have the cash on hand to purchase a property right away. Furthermore, obtaining approval for a standard bank loan can be challenging.

Bridge loans, on the other hand, allow businesses to obtain capital in as little as a single day. This enables the corporation to obtain a property that will increase future revenue and, as a result, pay for itself. After securing the real estate deal, a business will frequently refinance the bridge loan with more cost-effective long-term financing.

 

Renovating a House

A business may be unable to obtain a long-term mortgage if a commercial property fails to meet the tight criteria of potential lenders. Bringing a structure up to code, on the other hand, can be costly.

If a small business needs to repair a property before seeking for long-term finance, it can get a bridge loan. They can refinance the bridge loan with a standard, long-term mortgage once they’ve completed the repairs.

 

Keeping Businesses Afloat

In today’s corporate environment, many small businesses require a huge investor or acquirer to thrive. A company’s ability to gain the attention of a funder, on the other hand, can take months or even years.

Small businesses might take out a bridge loan to prevent cash flow problems while looking for an investor. This assists in covering bills such as rent, utilities, labor, and other expenses. It will eventually be repaid with investor funds.

 

How to Start a Business

Bridge loans are perfect for those who are just starting out in business and don’t yet have a steady stream of income. It can assist them in covering their costs as they establish themselves and build a consumer base. The owner can pay off the bridge loan once the business starts to make money.

Bridge loans can be extremely beneficial for those who are just starting out in the manufacturing industry. Businesses are often reimbursed after a product has been shipped, leaving them accountable for the initial costs. A bridge loan can help cover costs like materials and labor, and it can be returned after the goods are delivered.

 

What are the Benefits of Bridge Loans?

To overcome short-term cash flow concerns, your small business may benefit from a bridge loan. You can employ money to deal with time-sensitive situations including real estate purchases, business bills, and cash reserves.

In general, obtaining approval for a bridge loan is more easier than obtaining long-term finance. For businesses wishing to take out a loan, most alternative lenders offer significantly more relaxed requirements. Applications have also been simplified, and some can even be completed online from the convenience of your own home.

Bridge loans are frequently approved the same day. You can have extra cash in your palm right now with several financing alternatives. A standard long-term loan or mortgage, on the other hand, can take days or even weeks to process.

 

The Different Types of Bridge Loans

There is no such thing as a “one-size-fits-all” answer when it comes to bridging loans. Rather, a number of financing choices are available to meet the needs of varied business owners. We’ll go over the four most common types of bridge loans used by small businesses to keep cash flowing.

 

Short-term loans

Short-term loans are similar to long-term loans, except they often deal with lesser sums of money and have shorter repayment periods. Short-term loans, for the most part, have repayment terms of no more than eighteen months.

Short-term loans are also a lot easier to obtain than long-term loans. Small businesses can typically get approved for a short-term loan in as little as one day. However, short-term interest rates are typically much higher than long-term rates. The majority of short-term loans have interest rates of 10% or higher.

Pros:

• Businesses are not required to take out a long-term loan.
• There isn’t a lot of paper to deal with.
• The approval procedure is simple.

 

Cons:

• Interest rates are higher than for other sorts of loans.
• Installments may be required on a daily or monthly basis.

 

Business Line of Credit

A business line of credit functions similarly to a corporate credit card. You have a predetermined amount of money available to you, but you must repay it with interest. You can’t go beyond your upper limit, either. Limits are typically substantially larger than those on credit cards.

A business line of credit, unlike other sorts of loans, simply asks you to pay interest on the amounts you borrow. Most lenders, however, demand you to take out a larger initial loan than you would with other options. Interest rates are also often high, ranging from 8% to 12%.

 

Pros:

• A versatile option for a variety of business kinds
• Assists businesses in establishing good credit.
• There is no interest charged on monies that are not utilised.

 

Cons:

• Businesses may be required to provide collateral as a kind of insurance.
• Rates of interest and other fees can add up quickly.
• Paperwork can be challenging.

 

Financing for Accounts Receivable

Accounts receivable financing alternatives allow businesses that don’t be paid until the end of a task, such as construction, service, and more, to leverage future revenue to solve present cash flow concerns. Manufacturing businesses will benefit from accounts receivable finance.

You can receive cash from a lender by offering an unpaid invoice with this form of bridge loan. Despite low interest rates, you may be required to pay a weekly charge until you can pay off the loan in full, making this a costly option

This sort of financing is equally dangerous because it implies that you will receive complete payment from your client or consumer. Furthermore, if a client has poor credit, you may be unable to obtain a loan.

 

Pros:

• Funding that is immediate or near-immediate
• Process of application and approval is simple.
• It does not necessitate the use of collateral.

 

Cons:

• Approval is contingent on the client’s creditworthiness.
• Option with a high level of risk
• Weekly fees could be a possibility.

 

Merchant Cash Advance

The most straightforward sort of short-term bridge funding is a merchant cash advance. An alternative lender just offers you a set amount of money up front, which you can spend anyway you like.

You must also pay the lender a modest percentage of your sales in addition to repaying the cash with interest. This can make a merchant cash advance a far more expensive alternative than other types of bridging loans, particularly for profitable businesses.

 

Pros:

• There are only a few qualification requirements to meet.
• Most lenders do not require collateral.

 

Cons:

• Due to interest or other costs, it may be costly.
• Many loans have a daily payment requirement.

What to Consider When Getting a Bridge Loan

It might be tough to determine which sort of bridge loan is best for your small business as a small business owner. It’s easy to become overwhelmed when there are so many alternative lenders to select from. It’s critical to understand what elements to look for in any bridge loan, regardless of kind.

When it comes to short-term loans, interest is often the first thing that comes to mind for many business owners. Short-term loans frequently carry higher interest rates than long-term loans. Not only are customers prepared to pay for convenience, but lenders must also consider the risk of lending money.

You should look for a bridge loan with an interest rate you can afford. Take the time to calculate how much more you’ll be spending over the length of the payment period in addition to the initial advance. If this sum is greater than the amount you intend to make as a result of the loan, you might want to explore elsewhere.

It’s also a good idea to look into any additional costs that a lender might impose, such as a percentage of your sales or penalties. Because many business owners pay off their short-term loans sooner than intended, it’s a smart idea to look for bridge loans with no prepayment penalties.

You shold also think about how long it will take you to save enough money to repay a short-term loan. If you can’t make regular payments, you should opt for a loan with a longer repayment duration. Shorter-term bridge loans have a higher frequency of payments. Some agreements even require the borrower to pay on a daily basis.

 

How to Refinance a Bridge Loan

Not all business owners intend to repay a bridge loan within the specified time frame. They frequently want to convert to a long-term financing solution instead. Long-term loans usually feature better terms, like lower interest rates and less fees.

The primary goal of a bridge loan is to obtain immediate cash. Traditional loans can take days or even weeks to process, and small business owners must typically follow strict qualification criteria.

However, once you’ve used the funds from a bridge loan to repair your cash flow problem, it may be more cost-effective to move to a long-term loan. This is especially true for business owners who do not anticipate receiving additional funds anytime soon.

By refinancing your bridge loan, you can do so. If you fulfill the requirements, you can work with a lender, such as a bank, to come up with a more beneficial long-term repayment plan for the money you’ve borrowed.

There’s noreason to be concerned if you can’t get a loan from a major lender. You can always look into a small business loan, sometimes known as an SBA loan. Because this sort of funding is government-backed, it is a low-risk choice for lenders. This enables them to provide funds to small business owners who do not meet the requirements for traditional loans.

SBA loans are often larger than bridge loans, ranging up to $5 million in some cases. They also have substantially lengthier repayment terms, which can be as long as 25 years in some cases. Lenders are able to charge lower interest rates on these loans since they are low-risk.

 

Bridge Loans: The Bottom Line

Bridge loans can be a significant resource for small business owners, allowing them to manage cash flow concerns before they become more serious. A bridge loan is quick, simple, and provides a temporary solution to almost any financial problem. While bridge loans are more expensive than regular finance, the initial expenditure required to get one can help a small business assure its future success.

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Entrepreneurs 6 Options for Startup Business Loans

To fund your new business, you may need to turn to crowdfunding or ask friends and family for help.

If you’re just getting started, you’ll probably need to hunt for alternate funding and borrow money based on your personal resources. Small business loans are difficult to come by, and few lenders offer initial business loans to people with bad credit (a FICO score below 630). Any lender that provides a startup loan with no credit check or guaranteed approval should be avoided. It could be a costly alternative — or it could be a ruse.

Check your credit reports for errors that could be dragging down your score and dispute them with the credit agencies, keep a low balance on your credit cards, and stay on top of all of your bills to boost your credit score quickly.

 

1. Small business administration loans and nonprofit microloans

The microloan program of the US Small Business Administration provides loans of up to $50,000 to small businesses wanting to establish or develop. SBA microloans average around $13,000.

Microloans from the Small Business Administration are handled by nonprofit community lenders and are often easier to qualify for than larger loans. The disadvantage is that funding may not be adequate for all borrowers.

Borrowers can also use the SBA’s flagship 7(a) loan program to create their own businesses. However, SBA 7(a) loans are difficult to come by. They usually go to well-established enterprises that can provide collateral, which is a tangible asset that the lender can sell if you default. The requirements are strict, and even if you meet them, getting a small-business loan might take months.

If your finances are in shambles, microlenders and nonprofit lenders may be a better option. Many of them concentrate on minority or traditionally underrepresented small-business owners, as well as small businesses in economically distressed areas.

 

2. Family and Friends

Borrowing money from friends or family is perhaps the most typical technique of funding a new small business. Of course, if your credit is bad and your relatives and friends are aware of it, you’ll have to convince them that you’ll be able to repay them.

The cost of failing in these instances isn’t only monetary; it’s also personal.

“Regardless of what others say, business is personal,” says David Nilssen, CEO of Guidant Financial, a small-business finance business. “Most individuals would find it difficult to distinguish between the two.”

Reduce your circle of friends and family to those who are aware of your goals, and make sure they are comfortable with the dangers involved.

 

3. Credit cards

For startup capital, many entrepreneurs rely on business credit cards. This option can be used for short-term financing for business purchases that you know you’ll be able to pay off promptly.

Allowing the debt to remain unpaid will result in interest charges, quickly turning your credit card into a very expensive small-business loan.

Your business credit card’s annual percentage rates are mostly determined by your personal credit ratings. You’ll pay a greater interest rate if your personal credit is bad.

It’s worth mentioning that small businesses that rely significantly on credit card financing are more likely to fail, according to research.

 

4. Personal business loans

Personal loans, such as those offered by online lenders, are another option for new small-business owners. Borrowers with good personal credit and a steady income may find personal business loans to be a viable alternative.

Personal loans, like credit cards, can have high APRs (up to 36%), especially for borrowers with low credit.

Small-business entrepreneurs should accept personal loans as a “last resort,” according to Nilssen.

“When a business only requires a modest amount of money for things like… early-stage production or buying equipment,” he says, “they can work.”

 

5. Crowdfunding

Thanks to sites like Kickstarter and Indiegogo, which allow you to request cash through online campaigns, crowdfunding has become a popular way for small businesses to acquire money. You give gifts to your supporters instead of paying them back, which is why this technique is also known as rewards-based crowdfunding.

Stock crowdfunding, in which you tap a public pool of investors who agree to fund your small business in exchange for equity ownership, is also expanding. With new securities legislation that allow small-business owners to reach out to mom-and-pop investors as well as accredited investors, this has become an even more appealing choice.

According to Nilssen, crowdfunding is beneficial to businesses “who have a product and wish to test the market and evaluate the opportunity.” “No credit is required.”

 

6. Grants 

Small-business grants from private foundations and government agencies are another approach to fund your small business’s starting. Free cash isn’t always simple to come by, but for certain fledgling businesses, it may be worth the effort.

If you served in the US military, for example, you may be eligible for small-business subsidies for veterans. Women can also apply for small-business grants.

 

Questions that are frequently asked

 

How can I find out if I’m eligible for a business startup loan?

You’ll almost certainly need to borrow money depending on your personal finances if you’re just establishing a business. As a result, having a good personal credit score will assist you in obtaining financing. Around 700 is considered a decent credit score (credit scores range from 300 to 850).

Is it difficult to secure a loan for a new business?

Yes, to put it succinctly. You don’t have a track record for banks and other lenders to analyze because you’re just establishing a business.

Small-business loans can be found and compared. You may use NerdWallet’s interactive small-business loans tool to obtain finance that suits your specific needs. Sort by your business’s age, credit score, and the quantity of money you require. Lenders were picked based on characteristics like reliability and user experience.

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15 Best Sources of Startup Funding For Business Loans

Where Can You Get Funding for Your Startup?

It’s an exciting time when you decide to start a business. However, maintaining that momentum and passion as you go on your quest to make your business ambitions a reality is difficult. One particularly perplexing annoyance that might sap the wind from your sails as you establish a small business?

Obtaining finance for a startup.

Small business startup finance is particularly difficult to come by—most standard business loans require one or more years of operation—but that doesn’t imply it’s impossible. In reality, there are 15 fantastic startup funding choices available to you.

• SBA microloans

• Business lines of credit

• Blue Business Plus credit card

• Blue Business Cash credit card

• Ink Business Cash credit card

• Ink Unlimited credit card

• Venture capital

• Angel investors

• Personal savings

• Crowdfunding

• Grants

• Equipment financing

• Invoice financing

• Personal loans for business

• Friends and family loans

 

We’ll walk you through the finest startup business funding sources in this guide to help you decide which is the greatest fit for your business.

Best Business Funding Sources for Startups

In comparison to established businesses, startups often find it far more difficult to obtain capital due to a lack of business history, large income, and established credit. This does not rule out the possibility of obtaining starting capital for your new venture.

The following are the top sources of funding for small business startups:

• Business loans: Debt financing that allows you to acquire funds without diminishing your business’s ownership.
• Business credit cards: These cards let you use your personal credit history to get business credit for your business.
• Alternative sources of startup capital that may be worthwhile based on your business’s specific scenario.

Let’s get into the specifics.

1. SBA Microloans

The SBA microloan program, which was established to make starting business capital more accessible to women, minorities, and veterans, now partners with community-based, nonprofit intermediate lenders to give small business borrowers $500 to $50,000.

Traditional funding with these ideal rates and durations is rarely, if ever, accessible to brand-new businesses outside of this SBA-subsidized program, with interest rates ranging from 8% to 13% and term lengths not exceeding six years.

Traditional funding with these ideal rates and durations is rarely, if ever, accessible to brand-new businesses outside of this SBA-subsidized program, with interest rates ranging from 8% to 13% and term lengths not exceeding six years.

Furthermore, SBA microloan lenders are unique in that the Small Business Administration selects them to work as mentors and lenders with business owners face-to-face. (This is only one of the numerous benefits of SBA loans.) Microloan providers, in this function, serve not only as a source of money for small business startups, but also as counselors, offering advice on business management, marketing, and finance to ensure borrowers’ long-term success.

Having said that, all of those great benefits come with a lot of competition. As a result, the SBA microloan application and approval processes are not only complicated but also time-consuming. In general, applying for an SBA loan can take time, and borrowers may find themselves jumping through what appear to be superfluous hoops in order to meet the program’s standards.

 

2. Business Lines of Credit

Consider a business line of credit if you need a more flexible source of capital for your new venture. A line of credit is a pool of money established by the lender with a maximum credit limit. It’s sometimes defined as a cross between a credit card and a traditional business loan. Up to the credit limit, you can use the line of credit for almost any business purpose and in any quantity.

The most significant benefit of a business line of credit is that you only pay interest on the amount you’ve borrowed at any given moment. So, even if your credit limit is $30,000, if you only withdraw $10,000, you only pay interest on the $10,000 you actually use.

Aside from its flexibility, the business line of credit has a few additional major advantages as a source of startup funding:

• Money can be withdrawn at any moment and for any reason related to business.
• It’s more accessible to people who have bad credit.
• As a startup, this might be a great method to start creating your business credit history.
• Allows for changes in cash flow in the business.

For these reasons, a business line of credit is a viable source of funding for entrepreneurs seeking capital throughout their crucial first year of operations.

Keep in mind that most traditional business lenders will need candidates to have at least six months of business experience when applying for a business line of credit: Many banks are hesitant to take on the risk of lending money to start-up businesses.

3. Equipment Financing

Consider equipment financing as a top choice for funding your business if you require initial cash to purchase equipment. Because of its self-secured character, equipment finance for beginning businesses is especially suited to your needs.

While many equipment lenders will have minimum time in business criteria, a significant number will not. Currency Capital, for example, is one of the top equipment lenders around, and they don’t require a certain amount of time in business.

4. Accounts Payable Financing

Invoice finance is another financial option that you’ll be able to use quickly in your organization. You’ll be able to get a cash advance for a portion of the value of your outstanding invoices with invoice financing.

This type of startup finance requires that your business already has at least one invoiced customer, although many invoice financing businesses only demand that you have been in business for a short period of time to be eligible for funding.

BlueVine, for example, is an invoice financing company that just requires three months of business history to be considered for funding. If your startup meets these conditions, invoice finance may be a viable option for funding your new venture.

5. Personal Business Loans 

A personal loan for business can be worth considering for entrepreneurs with excellent personal credit and a new business idea that you feel confident putting your own money on the line for. These options have the benefit of being straightforward: There are no hidden costs, no complicated formulas, just a straightforward personal loan.

Consider that, in general, a personal loan has lower interest rates and easier payback conditions than a business loan, and it can be used for almost any purpose.

The negative, though, is that when you take out one of these loans for your business, the lender enters into a contract with you as an individual, not with your business. This means that if bad luck hits and the business goes bankrupt, you are still totally and personally liable for the outstanding sum.

6. Family and friends

What if you don’t qualify for any of these starting business loans but don’t want to rely on a business credit card for initial capital?

To support your startup, you can explore approaching friends and relatives. However, if you choose this method of business startup funding, make sure to systematize this usually less-formal form of debt.

Before choosing this potentially dangerous method of starting finance for small business entrepreneurs, consider the Minority Business Development Agency’s useful guidance for borrowing startup money from friends and relatives.

7. Chase Ink Cash Credit Card

The Chase Ink Cash is another excellent business credit card with excellent advantages for beginning business funding. This business credit card comes with a 12-month 0% initial APR period and a $500 cash back welcome incentive after spending $3,000 in the first three months with the card.

You’ll also get cash back at the following rates for the duration of your card membership:

1. On your first $25,000 spent each year, you’ll get 5% cash back:

• Stores selling office supplies
• When it comes to internet, cable, and phone services

 

1. On your first $25,000 spent each year, you’ll get 2% cash back:

• At gas stations
• At restaurants

 

1. 1% cash back on everything else and above those annual spending thresholds

 

If you want to get quick starting cash through a welcome offer and plan to spend a lot of money on office supplies and communication services, the Chase Ink Business Cash should be a no-brainer source of beginning capital.

 

CREDIT CARD

Ink Business Cash® Credit Card.

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• If you spend $7,500 in the first three months, you’ll get a $750 incentive
• plus a 12-month 0% intro APR on purchases.
• Depending on where you spend, you can get 5%, 2%, or 1% cash back.

 

8. Chase Ink Unlimited Credit Card

Finally, the Ink Unlimited is a great business credit card for startup funding. The Ink Unlimited, like the Ink Cash, has a 12-month introductory APR of 0%. The Ink Unlimited will also give you a $500 welcome bonus if you spend $3,000 in the first three months of using the card.

The Ink Unlimited, on the other hand, will give you an unlimited, flat-rate 1.5% cash back on every dollar you spend with it, unlike the Ink Cash. With this source of startup capital, you’ll receive $1.50 for every $1 you spend.

 

CREDIT CARD

Ink Business Unlimited® Credit Card

So, if you plan to spend money on non-traditional business expenses as you launch your new business, the Ink Unlimited is likely to provide you with more cash back than the Ink Cash.

Unlimited cash back and a welcome bonus are great features.

• If you spend $7,500 in the first three months, you’ll get a $750 incentive.
• For the first 12 months, there is a 0% intro APR on purchases.
• Every purchase earns you 1.5% cash back indefinitely.

 

INTRO APR – 0%

REGULAR APR – 13.24% – 19.24%

ANNUAL FEE – 0

MINIMUM CREDIT – 660

 

9. The American Express Blue Business Plus Credit Card 

Business credit cards, as we just said above, allow you to use your personal credit history to obtain business credit to support your business. Even better, many business credit cards, such as the Blue Business Plus, come with a 0% introductory APR term.

With the Blue Business Plus 2-month 0% intro APR term, you can progressively pay off your initial costs without accruing interest throughout the first 12 months of use.

The Blue Business Plus will be an interest-free option for your startup spending as long as you pay back your startup spending within the first 12 months.

 

CREDIT CARD

The Blue Business® Plus Credit Card from American Express

And by the time you’ve had 12 months in operation and your intro APR term is through, you won’t even be considered a startup.

However, you’ll be able to earn rewards points with your Blue Business Plus card for the duration of your card membership—you’ll receive 2x rewards points on the first $50,000 you spend each year and 1x after that.

Making purchases with a 0% intro APR term is ideal.

• 2X points for the first $50K 
• spent over a 12-month 0% intro APR period on purchases from the date of account opening
• There is no annual charge.

 

INTRO APR – 0%

REGULAR APR – 13.24% – 19.24%

ANNUAL FEE – 0

MINIMUM CREDIT – 660

 

10. American Express Blue Business Cash Credit Card

The Blue Business Cash is another excellent business credit card with a 12-month 0% initial APR period that is suitable for funding a small business starting.

Furthermore, rather than bonus points, the Blue Business Cash gives you cash back for your purchases. If you spend $50,000 or more in a calendar year, you’ll get 2% back on all qualified purchases, then 1% back on everything else.

Cash back will be considerably easier and more beneficial to turn into startup investment than rewards points. Plus, you won’t have to pay an annual fee to use all of the features that Blue Business Cash has to offer to help you get your startup finance off the ground.

 

CREDIT CARD

American Express Blue Business Cash™ Card

Great for: Getting cash back and taking advantage of a long 0% intro APR term.

• Purchases have a 0% intro APR for the first 12 months from the date of account opening.
• Up to $50,000 per calendar year, get 2% cash back on all qualified purchases, thereafter get 1%.
• There is no annual charge.

 

INTRO APR – 0%

REGULAR APR – 13.24% – 19.24%

ANNUAL FEE – 0

MINIMUM CREDIT – 660

 

11. Venture Capital

Wouldn’t it be fantastic to start a new business without going into debt as a startup business owner seeking for sources of funding?

If you’re looking for a way to fund a startup without taking on interest-bearing debt, consider venture capital, which is a type of equity financing. In reality, if you’re in the proper industry—say, a software startup—figuring out how to fund a startup without taking on debt will be rather simple.

Venture capitalists may be waiting up at your door, especially if you have past experience and a strong company idea. VC firms will assess your new business based on factors such as its pre-money valuation, sales, and team, so be prepared to discuss these factors before pitching to any early-stage venture capital organizations.

 

12. Angel Investors

Another fantastic source of startup or early-stage business funding is to seek out angel investors. Angel investors, unlike venture capital, are typically rich individuals who offer operating cash in exchange for a share of a business’s ownership.

Angel financing is often sought during a startup’s early phases of development. Despite the fact that angel investors typically do not invest as much as venture capitalists, they are nevertheless generous individuals who can invest hundreds of thousands of dollars in your business.

 

13. Individual Savings

Have you thought about how much of your own money you’re willing to put into your own business? If you’re confident enough in your new business idea to seek funding from strangers, show your confidence by putting some of your own money into it.

After all, why should anyone else—even those who regularly invest in startups—choose to support your new venture if you aren’t willing to take a chance on it?

Also, if you plan on asking for an SBA loan in the future, this is a good option to take. The SBA prefers to see that a business owner has invested personally in their business; when the owner has a large personal stake in its success, things are more likely to go well.

 

14. Crowdfunding

Using crowdfunding platforms such as Kickstarter and IndieGoGo, you may be able to fund your business by asking a large number of people to contribute small amounts of money to your small business startup. Each backer contribution contributes to your goal progressively, so even the tiniest donation helps—you don’t need an accredited investor to support your business.

Setting up crowdfunding campaigns is also a terrific method to get your startup’s name out there while you’re looking for capital.

However, keep in mind that crowdfunding rarely generates huge sums of beginning funds, and running a campaign can be time-consuming. Consider whether the chances for exposure through crowdfunding sites will be valuable even if the campaign does not fully fund your business before pursuing this option. If you don’t reach your crowdfunding goal, you may have to cover the balance of your startup expenditures on your own.

Consider equity crowdfunding as a middle ground between two popular startup funding options. This allows startups to raise funds by selling securities to a wide number of people. Each tiny investment might add up to a significant sum of money, but each investment also means giving up equity, so bear that in mind when considering equity crowdfunding.

 

15. Grants for Small Businesses

Grants for small businesses are a type of startup finance that requires no return, unlike debt, and no exchange of stock, unlike venture capital. They are often considered the closest thing to “free money” that you could ever get for your business.

Small business grants are usually worth looking for as a source of capital for a new business, even if they are difficult to come by. They tend to be quite industry-specific, so you’ll need to thoroughly analyze your business situation and establish your niche in order to customize your grant proposal to the grant sponsor’s objectives.

But there’s almost certainly something that pertains to you, from small business grants for women to small business grants for minorities, and so on.

 

Which Startup Funding Option Is Best for You?

Startups have a variety of funding choices. You must first gather critical information about your business before determining which finance option is best for your startup. Lenders, particularly banks and venture capitalists, are interested in knowing exactly where your business stands in terms of development and direction. Make certain you have the following details about your business:

• Time in business
• Annual revenue
• Credit score
• Business plan
• Industry

 

Then you must ask yourself, “What are my goals and needs?” If your digital business is still in the early phases of development and requires additional working capital to continue developing, you might consider equity financing options like venture capital or angel investment.

If you’re a more established business looking for money to keep up with payroll or sustain cash flow, acquiring a business loan or credit card from a bank or alternative lender makes more sense because you’ve proven that your business can last.

Final Thoughts

Although startups have fewer choices for business financing, it is still possible to secure money for a business with little or no prior experience. Make sure to check out the top 15 startup ideas we’ve listed below.

If you decide to go with one of these options for startup funding, keep the following in mind:

• Use your good personal credit to your advantage.
• Make use of your previous knowledge.
• Make a detailed business plan.
• Choose the appropriate industry.
• Demonstrate your financial investment.

You’ll be well on your way to finding the finest type of startup capital for your new business if you keep these pointers in mind

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Inventory Financing, Loans and Lines of Credit

 

 

 

 

 

 

Most business that aren’t service-based rely on inventory for its survival. It’s what keeps your business afloat and keeps your customers satisfied. Even strong, lucrative businesses, however, may require additional money from time to time. Inventory financing may be able to help you receive the money you need if your business could use some extra cash and you have unsold inventory in your warehouse or storage.

What Is Inventory Financing?

Inventory financing is a type of asset-based loan where the value of some or all of your inventory is used to secure the loan. The lender gives you a loan based on a proportion of the value of your inventory, and the inventory serves as collateral for the loan. Inventory finance is commonly used by business owners to purchase new inventory, but it can also be utilized for a variety of other needs. Inventory finance can help businesses with short-term cash flow gaps or stock up on inventory in anticipation for a busy season.

Businesses that constantly have substantial amounts of inventory, such as shops, restaurants, and wholesalers, are the most common users of inventory financing. Automotive dealers, for example, must purchase significant volumes of very expensive inventory, and this inventory consumes a large portion of their capital. Even a profitable auto dealer may have limited funds to grow their operations or hire additional salespeople. Inventory financing may be able to assist in the provision of that additional capital.

Accounts Receivable Financing vs. Inventory Financing

At first look, inventory finance and accounts receivable financing appear to be the same thing, but there is one big difference: depreciation. The amount of money owed by your clients remains constant with accounts receivable financing, such as invoice factoring, no matter how much time passes. The lender could give you a loan for the entire amount of your accounts receivable, so you don’t have to worry about the value of your outstanding bills decreasing. Inventory, on the other hand, is subject to depreciation over time. There will be a gap between the loan payback amount and the value of the collateral if a lender grants you a loan equal to the amount of your inventory and your inventory does not sell as quickly as you intended. As a result, the lender is at risk of losing money.

Despite the danger of depreciation, inventory financing is often easier to get than an unsecured loan because your inventory serves as collateral, lowering the lender’s risk.

 

 

 

 

 

 

Inventory Financing Options

An inventory loan and an inventory line of credit are the two most common types of inventory financing. While both types of inventory financing use your inventory as collateral, these two loan types have significant implications for your business’s future funding.

Inventory Loan

A business loan based on the value of your inventory is known as an inventory financing loan. An inventory loan, like a conventional small business loan, is for a defined amount that is repaid in monthly payments over a set repayment term or in one lump sum after the inventory is sold. You will be responsible for repaying the entire loan amount, and if you require additional funds, you will need to take out another loan.

Inventory Line of Credit

While a loan’s funds can only be utilized once, an inventory line of credit can supply you with additional funds on a continuous, as-needed basis. Many business owners choose to get a business line of credit so that they can address any unexpected expenses that may arise. You can enter into an inventory finance agreement with a lender to set terms and conditions for a long-term business funding relationship.

Inventory Financing’s Advantages and Disadvantages

Because these loans are backed by merchandise, lenders might place less attention on your business credit history, credit score, and other creditworthiness factors. This can make inventory finance more accessible to companies who can’t secure a traditional business loan, such as a working capital loan. This type of finance is also more convenient to apply for and acquire than a business loan.

Inventory financing, on the other hand, can be more expensive in the long term than paying cash for inventory, even if the interest rate is modest. Although inventory financing can be secured by the inventory itself, in some cases the lender may require extra security. A lender may like to visit your facility to ensure that the inventory being financed is being properly cared for and will not be damaged or decline in value before being sold. On-site visits are usually accompanied by an appraisal cost, which you will be responsible for paying.

Keep in mind that most lenders will only lend money for a fraction of the value of your inventory, not the entire appraised value. As a result, if you’re using inventory finance to buy inventory, keep in mind that you’ll need to put up some cash.

Obtaining Inventory Financing

Inventory financing can be obtained via a regular bank, a credit union, or an online lender. Because inventory financing is a recurrent loan, it’s critical to do your research and choose the finest financing business for your company.

Inventory financing is based on the inventory’s liquidation value and the likelihood of a quick sale. Lenders will want to see documentation that shows you have a high inventory turnover and can really sell the product throughout the application process, such as:

• Balance sheet, including sales history
• P&L statements
• Estimated sales
• Statement of Cash Flow
• Business plan

Lenders will also want to verify that you have a good inventory management system in place so that they aren’t concerned that you are buying more inventory than you need and can sell.

Additional Financing Options

Inventory finance may not be ideal for your business if you don’t have a lot of inventory. There are several other methods of finance that may provide a more flexible funding choice in that instance, such as:

Working Capital Loan: These short-term loans provide flexible and unsecured capital to help bridge any cash flow shortages. Working capital loans can be used for anything a business needs, from inventory purchases to hiring extra employees. As the owner, you have the last say.

Check out our in depth guide to term loans here: https://gforcefunding.com/business-term-loans-in-2021-what-are-the-best-options/

Equipment Loan: If an unsecured loan isn’t the greatest option, an equipment loan might let you buy new equipment while paying it off over time. Even if you don’t have a perfect credit history, you might be able to qualify for a secured loan.

Take a look at our guide to equipment financing here: https://gforcefunding.com/equipment-financing-what-you-need-to-know-in-2022/

Apply today with G-Force Funding for business loans and equipment loans from $10,000 – $1,000,000.

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Business Term Loans in 2022: What Are Your Best Options?

 

 

 

 

 

 

What Is a Business Term Loan?

A business term loan is a lump sum of capital which is repaid with periodical repayments at a fixed interest rate. It is the most common type of loan that people think of when they think of small business loans.

The “term” in “term loan” refers to the length of the loan’s payback period, which can vary from a few months to several years depending on the type of loan. As a result, while term loans can be any duration, the term “business term loan” is most commonly used to refer to loans with maturities ranging from one to five years.

Term loans are typically used by business owners to fund one-time investments in their small businesses, such as real estate purchases, business expansions, debt refinancing, and more.

Banks, credit unions, and online lenders all offer business term loans.

 

What Are Business Term Loans and How Do They Work?

As briefly indicated above, when it comes to commercial (or even personal) financing, business term loans are likely what first to mind. A term loan allows you to borrow a large sum of money from a small business lender, which you then repay over time with interest and fees.

You’ll make equal installments over the course of your loan term, however your payment schedule may vary depending on the type of business term loan and the lender you’re dealing with.

Business term loans can be obtained from a variety of sources, including banks, credit unions, and online lenders. Banks and credit unions, on the whole, will give the best rates and terms, but they will also require top qualifications and be longer to finance. On the other hand, online lenders will provide more flexibility and faster funding periods, but they will likely be more expensive and have shorter terms.

Overall, one of the advantages of business term loans is that they may be utilized for a range of business finance needs in addition to having a regular payment schedule. As a result, you’ll find that medium- and long-term loans (as opposed to short-term loans) are frequently utilized for:

• Purchasing inventory or equipment
• Working capital
• Refinancing other business debts
• Hiring staff \ meeting payroll or tax obligations
• Financing the expansion of a business
• Real-estate acquisition
• Funding long-term investments in general

 

Rates and Terms for Business Term Loans

Business term loans typically have repayment durations of one to five years.

Short-term loans with periods of one year or less, as well as longer-term loans (such SBA loans) with terms of up to 25 years, are available. Loans with terms of one to five years are sometimes referred to as “medium-term loans” in this context.

In light of this, most business term loans have weekly or monthly payback schedules, however some short-term loans may have daily repayment schedules. Furthermore, while most short-term loan amounts are around $500,000 (or even $250,000), longer-term business term loans are available in bigger quantities.

Although interest rates on business term loans vary depending on the lender and your business’s credentials, you can expect rates to range from 7% to 30% in most cases. Bank and SBA loans, on the other hand, may have interest rates that are lower than 7%, especially if you’re a highly qualified borrower.

 

Example of a Business Term Loan

Let’s look at an example to better understand how business term loans function.

Let’s imagine you’re offered a $250,000 term loan with monthly installments and a two-year repayment period. The interest rate on this loan is 8%, and you’ll have to pay a 2% origination fee to the lender.

You may use this information to estimate your monthly payments and figure how much this loan will cost your business by plugging the numbers into a term loan calculator.

With a total payback of $271,363.75, you’ll make monthly payments of $11,306.82 to the lender. As a result, the total cost of this loan is $26,363.75. In addition, instead of using the standard interest rate, you can apply these methods to calculate your APR. If your interest rate is 8% but you additionally have a 2% origination fee, your APR will be greater than the 8% advertised.

 

Types of Business Term Loans

As previously stated, the term “business term loan” can refer to a range of financial products that all have the same term structure.

As a result, it’s critical to understand the many sorts of business term loans. The most typical way to differentiate business term loans is by the duration of their repayment period—short-term, medium-term, or long-term—as we’ve seen so far in this topic.

Short-term loans are those with a one-year repayment duration or less (sometimes up to 18 months). These loans are typically given by online lenders and have the most flexible eligibility and funding times. Short-term loans, on the other hand, are usually the most costly sort of business term loan. Get more information on short-term business financing.

• Loans with a medium-term maturity: One to five years is the repayment period for medium-term loans. Online lenders, as well as banks and credit unions, offer these loans. Despite the fact that these products have more strict standards and take longer to finance than short-term loans, they are frequently significantly more affordable. Learn more about the benefits of medium-term loans.
• Long-term loans: Although the phrases medium-term and long-term are sometimes interchanged, long-term loans are defined as those with periods of more than five years. SBA loans, which have maturities of up to 25 years, are among the most prominent long-term loans. Long-term loans are more difficult to obtain and take longer to finance, but they have the lowest interest rates. Traditional lenders, such as banks and credit unions, nearly usually issue these term loans. Get more information on long-term business loans. Although business term loans are frequently divided into these categories, keep in mind that they can also be distinguished by the issuer—bank loans, credit union loans, online loans, and so on.

 

 

 

 

 

 

 

 

The Benefits and Drawbacks of Business Term Loans

When it comes down to it, term loans aren’t the only way for small businesses to get money. There are many different forms of small business loans to consider, from lines of credit to asset-based financing—how do you know if a term loan is best for you?

You can use the following pros and cons list to assist you in making that decision:

Pros:

• Set payment schedule: As previously stated, one of the most appealing features of term loans is their predictable payment schedule. You’ll get a set payment schedule and know exactly how much you owe with each payment, regardless of how long your loan takes to repay. Term loans are one of the most predictable forms of business financing since they make the overall cost of the debt, as well as the payments, clear to understand. It’s also a lot easier to monitor your cash flow and other business finances with these consistent payments.
• Suitable for a variety of business needs: Another significant advantage of business term loans is that they can be utilized for a wide range of reasons. Most term loan lenders will place few restrictions on how you can use your loan in general. However, the length of your term will have an impact on how you can use your loan—a medium-term loan is better for significant equipment purchases, whereas a short-term loan is ideal for small working capital needs.
• Online lenders can fund term loans rapidly and with fewer conditions than traditional lenders: Although banks and credit unions, as well as online lenders, can provide business term loans, online term loans might be a good option for businesses looking for speed and flexibility. In comparison to banks, online lenders can provide simplified applications, more flexible conditions, and faster funding times—and while online business loans often have higher interest rates than bank loans, medium-term loans from online lenders can still be very reasonable.
• Longer-term loans are ideal for funding bigger purchases: There is no better method to fund a major business investment than with a medium- or long-term loan. Overall, term loans—especially bank and SBA loans—are some of the most affordable financing solutions on the market, and they provide you with substantial sums of capital to fund larger investments over time.

Cons:

• Prepayment penalties: One of the most significant disadvantages of business term loans is the possibility of prepayment penalties. Although not all lenders impose prepayment penalties, some do so to guarantee that they earn the interest they are promised, even if you repay your loan early. Always inquire about a term loan lender’s prepayment procedures before agreeing to work with them.
• Loans for a shorter period of time can be costly: Online term loans are almost usually more expensive than their bank counterparts, as we’ve discussed. Of course, this isn’t to suggest that you won’t be able to obtain reasonable business term loans. Instead, it’s vital to note that short-term loans, in particular, can be costly—especially for borrowers who aren’t well-qualified. As a result, as you consider your business term loan options, you should always consider the whole cost of the debt and make sure it’s something your business can afford.
• Collateral or a personal guarantee is frequently required: Finally, while asset-based loans may provide for more flexibility in terms of collateral and guarantees, practically all business term loans are secured, requiring physical collateral or a personal guarantee. As an additional type of security, some lenders will place a UCC-lien on your business assets. In general, the stronger your business’s credentials are, the more leeway you’ll have when it comes to negotiating collateral requirements.

 

How to Get a Term Loan for Your Business

As you can see, there are a variety of viable options to consider when looking for a term loan for your business

As a result, as you examine different lenders, you’ll want to evaluate your business first to see what products you can truly qualify for.

Although business loan criteria differ by lender, most products demand a minimum credit score of 600, at least one year in operation, and $100,000 in yearly revenue.

As previously said, bank and SBA loans will necessitate the highest level of credentials, whilst short-term loans will provide more flexibility. The better your qualifications, though, the better the rates and terms you’ll be able to get with your loan.

 

 

 

 

 

 

Check out our guide to the Best Business Loans for People with Bad Credit.

 

Obtaining a Business Term Loan

With this in mind, you’ll be ready to start drafting your business loan application once you’ve identified where you’re likely to qualify.

Alternative lenders often offer online-based, streamlined applications with minimum documentation, whereas banks are more likely to require substantial documentation and an in-person or paper application. When applying for a business term loan, you should anticipate to give some (if not all) of the following information:

 

• A driver’s license, a voided business check, evidence of ownership, a business license, and other basic personal and business details are required
• Bank statements, both personal and business
• Your balance sheet and profit and loss statement are examples of financial statements
• Credit score for individuals and businesses
• Evidence of collateral
• Personal and business tax returns

 

Furthermore, as previously stated, many lenders will need you to sign a personal guarantee for your loan, while others will place a UCC-lien on your business’s assets. As a result, before signing any contract, you should carefully check all of the specifics to verify that you understand all of the terms, costs, and obligations.

 

Final Thoughts

After all, business term loans are one of the most frequent types of commercial financing—and for good reason. You have a range of alternatives to pick from, including short-term and long-term loans, online loans, and bank loans, to discover the best answer for your business’s needs.

 

Check out our other guides on different types of business loans.

 

With all of these alternatives, keep in mind that the ideal loan for your business is the most cheap one—so don’t be hesitant to shop around and evaluate offers from a variety of lenders before making a final decision.

Apply today with G-Force Funding for business loans from $10,000 – $1,000,000.

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Equipment Financing: What You Need To Know In 2022

 

 

 

 

 

 

For many small businesses, equipment financing has become a popular choice. Small businesses are frequently part of industries that rely heavily on equipment. Construction companies, for example, must have equipment to complete jobs and bid for future contracts. As long as the business can afford it, the equipment becomes a strategic advantage.

Heavy equipment and machinery is one of the ways construction firms can set themselves apart from their competitors. However, obtaining equipment necessitate a large capital outflow, which the business may not have on hand at all times. Creating a significant dent in a company’s existing liquidity poses a significant danger. Instead of purchasing equipment completely with cash, your business has two options: equipment leasing and equipment financing. The decision to acquire equipment through leasing or financing is based on various factors that are specific to the company.

Construction-related heavy equipment such as dump trucks and backhoes aren’t the only machines engaged. Telephone systems, software suites, desks, cubicles, office appliances, and other tools and resources that you utilize to perform your business qualify as equipment.

Naturally, all of this equipment may be costly, which is where equipment financing comes in. This tutorial will walk you through how equipment financing works, how to utilize it, and how to qualify for it.

 

Obtaining Funding Is Now Easier Than Ever

When it comes to equipment purchases, business owners used to have no choice except to go to a bank for a loan. However, the odds were stacked against you. The majority of bank loans are declined, and the door is frequently slammed in your face early on.

As previously indicated, business owners can also approach equipment providers and try to negotiate a lease. Equipment leasing allows you to essentially hire a defined piece of equipment from a lender. The length of the lease can vary, but both the borrower and the lender agree on it up front. The borrower makes monthly payments until the lease expires, at which point the equipment can be returned, purchased, or renewed.

Both bank loans and supplier leasing are still viable options, although the customer service involved isn’t always up to par. Borrowers have the following limitations when using these funding options:

• You must submit an application for funding in person
• You can only choose from a limited number of funding choices
• It necessitates a pile of paperwork and is a lengthy process that does not meet your demands
• Approval rates can be unexpectedly low
• The lender is uninterested in earning your business

Because of the development of online lenders like G-Force Funding, customers seeking equipment financing can get much faster decisions on their applications, as the entire process has been streamlined to the point that traditional borrowers would faint if they observed a modern transaction.

Furthermore, the online approach provides you with a large number of options. Applying with G-Force Funding, for example, gives you access multiple lenders’ financing alternatives, and it takes less than 10 minutes to complete the application.

Lenders are obligated to offer the best feasible rates and terms in such a competitive market.

 

 

 

 

 

 

 

 

How Does Equipment Financing It Work?

If you’re wondering how much money you can get with equipment financing, the answer is that it depends. Smaller variants in the $5,000 range are common, and can cover most office equipment and other similar items. On the higher end, the sums can be as high as $5,000,000.

This sort of financing has a wide range of periods, ranging from one year to five years. Interest rates as low as 7.5 percent are possible, though this is obviously dependent on your credit history and other factors.

Will the loan’s cost be justified for your business? Before you can confidently sign on the dotted line, you must first determine the ROI.

Immediacy is one of the trademarks of equipment finance. You can typically get approved and funded in as little as 24 hours once you get the ball rolling.

In most circumstances, the equipment you acquire will serve as the loan’s collateral. So, if you default on your loan, the lender will seize your equipment. The lender may also request a personal guarantee or use a blanket lien in some cases. In both circumstances, if you default, the lender may be able to seize assets.

You have nothing to worry about if you make your payments on time, as you should with any loan. It’s just as crucial to grasp the full scope of the loan and be aware of the implications if you fail to satisfy your responsibilities.

 

What Kinds of Things Can You Get With Equipment Financing?

Equipment financing has a wide range of applications, just like the businesses that need it. Basically, if you need anything inert and practical for your business, there’s a good chance you’ll be able to finance it. It doesn’t even have to be tangible; business software is an excellent option for equipment finance.

When small business owners have problems with equipment financing, it’s usually due to a lack of knowledge. We’ve already discussed how broad the concept of “equipment” may be, but some people still associate it with forklifts, hydraulic lifts, refrigerated trucks, conveyor belts, and other such items. Let’s look at a few instances of how you might use this form of finance to help your business grow.

For Your Workplace
If your staff works out of an external office, you can use equipment financing to keep it up to date. The same may be said for home offices. The spectrum of possible applications is enormous.

• Solar panels
• Stand-up desks
• Office chairs
• Lights
• Heaters
• Tile flooring
• Carpet
• Rugs
• Microwaves
• Toasters
• Refrigerators
• Freezers
• Water coolers
• Drinking fountains
• Coffee makers
• Blenders
• Air conditioning units
• Filing cabinets
• Cubicles
• Security systems
• Aquariums
• Televisions
• DVD players
• Couches
• Ottomans

 

 

 

 

 

 

 

For all of your technological requirements

In order for your business to succeed in today’s competitive environment, you’ll need the appropriate technology. Whether it’s systems for safely storing client data or point-of-sale solutions that make transactions go more smoothly, these investments can pay off big time.

• Laptop computers
• Desktop computers
• Tablets
• External hard drives
• Keyboards
• Mice
• Printers
• Phones
• Routers
• Networking tools
• Bookkeeping software
• Payment processing systems
• Operating systems
• CRM software
• Inventory management software
• Payroll software
• Email tools

 

For Your Retail Business
Do you own a storefront? If that’s the case, you’ll need a slew of tools to keep things going properly. Here are some of the things you should think about.

• Shelving
• Displays
• Mirrors
• Mannequins
• Shopping carts
• Shopping baskets
• Banners
• Room dividers
• Monitors
• Toilets
• Sinks
• Drinking fountains
• Cash registers
• Scanners
• Receipt paper
• Receipt printers

 

For the Road
Vehicles are required by more than simply delivery companies. Whether you’re a software startup or a birdhouse repair shop, you’ll almost certainly require transportation.

• Delivery vans
• Fleet cars
• Electric vehicles
• GPS devices
• Dollies
• Floor mats
• Seat protectors

 

 

 

 

 

 

 

For Your Jobs
To complete your profession, you’ll need tools and equipment that differ by industry. Equipment finance can assist you in obtaining what you require and then maintaining it at a high level of performance.

• Forklifts
• Compressors
• Hydraulic lifts
• Conveyor belts
• Box crushers
• Dump truckers
• Graders
• Backhoes
• Tractors
• Jackhammers
• Wrenches
• Ovens
• Fryers
• Freezers
• Mixers

Perhaps you’re unsure whether equipment finance will suffice for your existing business needs. If you have any additional questions, please contact one of our friendly loan professionals, your business mentor, or peers in your sector who have likely had similar funding challenges and can help.

 

How Do You Get Equipment Financing?

It’s easier than you would think to qualify for equipment financing. You’ll typically need to have been in business for at least 1 year, have annual revenue of $120,000 or more, and a credit score of 650 or higher. It’s not as tough to get as other types of financing because the collateral is generally included in the loan.
Keep in mind that the vetting procedure for equipment finance is much faster than it is for many other types of borrowing. The nature of the collateral contributes to this expediency. If you applied for different loans, such as a term loan or a startup loan, you may be requested to submit collateral.
The value of the collateral is incorporated right into the loan with equipment financing. As a result, the lender may quickly record the value and move forward with the approval process. Just keep in mind that if you default on the loan, the lender will seize your valuable assets to make up for their losses. As a result, the very item that speeds up the approval procedure can become a risk if you can’t meet your financial responsibilities.
There are a few more things to think about when it comes to your loan. Pay special attention to the loan’s cost once you’ve cut down the list of possibilities to a few that offer similar degrees of reliability and customer service. This typically entails looking at figures like the annual percentage rate (APR), total cost of capital (TCC), average monthly payment, and cents per dollar.

Apply today with G-Force Funding for business loans and equipment loans from $10,000 – $1,000,000.

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How Equipment Financing Can Grow Your Business

 

 

 

 

 

 

When it comes to expanding your business, having the correct equipment might help you achieve your goals. Financing may be the answer if purchasing new equipment or upgrading old equipment is a cash flow challenge or if you don’t want to deplete your cash reserves. Equipment financing allows you to purchase the equipment you need while also expanding your business. This tutorial will walk you through the most critical aspects of financing equipment purchases.

 

What is the definition of equipment financing?

Before going into the various applications of equipment finance, it’s important to first grasp what it is.

Simply put, equipment financing is a sort of business credit specifically designed for the purchase of equipment. Some lenders may not need a down payment because the equipment serves as collateral for the loan. Because of these criteria, you won’t have to put any of your business or personal assets on the line to get funding.

If you know when to use it, almost any business can benefit from equipment finance to help them develop. When compared to other types of business loans, such as a Small Business Administration (SBA) loan or a term loan, qualifying is usually easier. In general, equipment financing is possible if:

• You’ve been in operation for at least a year.
• You have a yearly income of $50,000 or more.
• You have a credit score of at least 650.

 

If you can show the lender consistent cash flow and revenues, you may be able to qualify for equipment financing even if your credit score is below 650. When it comes to loan terms, each lender has their own set of restrictions. Loan durations normally run from 1 to 5 years, with borrowing limits typically ranging from $5,000 to $5 million.

Other types of business loans and lines of credit, on the other hand, may have borrowing limits of $1 million, $500,000, or less. Large-scale investments for short- or long-term growth projects can be financed via equipment financing.

Another advantage? Equipment financing can be quick in addition to being flexible. Loans can be funded in as little as 24 hours, allowing you to make a purchase swiftly. That kind of quickness is critical if you need a critical piece of equipment to keep your business going or if you find a great price on equipment.

 

Here are eight ways businesses can use equipment finance to fuel growth now that you understand what it is and how it works:

 

• Equipment for construction, contracting, and manufacturing

Manufacturing, construction or contracting  industries frequently necessitates the use of heavy equipment, which can be costly. If you work in construction or contracting, for example, your equipment requirements can include:

• Tractors and forklifts
• Excavators
• Backhoes
• Bulldozers
• Graders
• Mixers and spreaders for cement
• Nail guns and electric drills and power tools
• Equipment for welding and soldering
• Industrial sawhorses and saws
• Equipment for painting or pressure cleaning
• Scaffolding and ladders
• Tools and equipment for landscaping

 

Your production equipment requirements may vary depending on what you manufacture. Machine tools or a die cutter, for example, as well as carpentry tools, workbenches, fabrication equipment, and plastic molding equipment, may be required.

All of these items, and more, can be purchased with the help of equipment financing, allowing you to stay competitive in your field. By upgrading your equipment, you may be able to broaden your market reach by expanding out into new service or product categories.

 

2. Software and hardware for retail point-of-sale

Building customer trust in retail requires ensuring that payments are processed promptly, efficiently, and securely. Customers may be less likely to buy with you again if they believe they are taking too much time at the checkout or are concerned about their payment and personal information being stolen by a security threat.

Upgrading your point-of-sale hardware or software helps ensure that your customers have the best possible payment experience, encouraging them to return again and again. You can outfit your retail shop with the most up-to-date point-of-sale tools with equipment financing, such as:

• New cash registers
• EMV chip readers
• Contactless payment terminals
• Mobile payment readers
• Barcode label machines
• Payment processing software

These safeguards may help to improve payment security, perhaps lowering losses as your business expands. Another loss prevention tool you might invest in with equipment financing is an in-store security system with video cameras.

 

3. Restaurant and kitchen equipment

In order to manage a restaurant, café, or bistro, several pieces of equipment are required. Your restaurant business could be short lived if you don’t have the necessary tools for storing, preparing, and serving good food.

Depending on the type of restaurant you have, this may entail purchasing:

• Ovens for commercial use
• Grills, both gas and electric
• Fryers 
• Freezers
• Food processors
• Bread warmers
• Refrigerators, coolers, and freezers
• Stand mixers
• Pastry mixers
• Dishwashing equipment
• Food preparation tables
• Fruit and vegetable slicers on the market

 

That list only includes a few of the materials you may require to manage your business behind the scenes. Your equipment requirements for the front of the house could include:

• Espresso and cappuccino machines
• Coolers for beer and wine
• Salad bars or buffet tables
• Bins of ice
• Drink dispensers
• Coffee and tea stations
• Tables, chairs, booths, and stools.
• Glassware and silverware storage racks
• Point-of-sale systems (POS)  

 

It’s time to look into equipment finance. Whether you’re just getting started with your restaurant or planning a new location, an equipment loan can help you get the resources you need to keep your customers pleased and your business expanding.

 

4. Office equipment

If your business is based in an office, you’ll need a few items to make the workday go more smoothly for yourself and your employees, if you have any. Among the items on your list could be:

• Desks and chairs for desks
• Cabinets for filing
• Bookcases
• Fax machines, printers, and copiers
• Decorative lighting
• Cubicles
• If you want an open office concept, use sofas, chairs, and small tables.
• Flooring or rugs

 

If your business has a client waiting room, you can take advantage of that space by using equipment financing. Without having to dip into your business’s performance reserves, you may utilize an equipment loan to purchase sofas, chairs, tables, lamps, a coffee maker, a tiny fridge to store bottled water, or TVs to keep customers amused and comfortable while they wait.

 

5. Software and hardware for computers

Technology is always changing, and new software packages are constantly being developed. While software isn’t as physical as construction or office equipment, it’s just as crucial to your business’s overall growth prospects. You can’t afford to be two steps behind your competition if they’re using the most recent and greatest version of a piece of software.

So, what types of software can you get with equipment financing? The list is extensive, but it contains the following:

• Computer operating systems
• CRM (customer relationship management) software 
• Accounting and bookkeeping software
• Asset management software
• Invoicing software
• Payroll software
• Email management and marketing programs
• E-commerce and shopping cart software
• Employee scheduling software
• Time and attendance software
• Security software
• Cloud software programs
• Inventory and supply chain management software
• Big data analysis and storage software
• Human resources and talent management software

 

Any type of organization can benefit from these software solutions. There are also specialized computer software programs for various industries. Investing in construction management software, for example, could make it easier to track and manage current projects if you own a construction business. Patient scheduling software and medical billing software may be necessary for developing your patient list if you have a small medical business.

You’ll need something to run it on in addition to obtaining the most recent software version. Equipment financing can help you purchase or upgrade desktop computers, laptops, and tablets for your business.

 

6. Specialized equipment and appliances

On a daily basis, your business may rely on specific appliances. Some will directly affect your ability to expand (think refrigerators or ovens if you run a restaurant), while others will indirectly assist you grow.

Let’s imagine you’re the owner of a small accounting firm with a half-dozen staff. If your employees have access to a break room or kitchen where they can prepare and eat meals, ensure they have the necessary equipment.

That room may need the purchase of a refrigerator, microwave, and coffee machine, at the very least. However, that money may be well spent if your staff can recharge their batteries during a break and return to their desks more productive.

Then there’s the equipment that certain businesses require to function. For example, if you own a dental office, you won’t be able to adequately treat your patients without dental chairs, cleaning tools, and x-ray machines. Hydraulic lifts, air compressors, sanders, and paint booths may be required at a garage or body shop. Equipment financing makes these purchases a lot easier.7. 7

 

7. Vehicles and trailers

Vehicles are necessary for some enterprises. Vehicles or trailers, for example, may be required if:

• You operate a food truck
• Your staff drive cars that are provided by the corporation.
• You own a dump truck or a moving truck business.
• You own a tree-trimming business and need tree trucks or trailers to transport debris.
• Your business offers delivery services in your local area
• You transport freight over large distances on a regular basis.

 

You could lease automobiles for your business, but if you expect to use them for a long time, acquiring them may be more cost-effective. If you pay off an equipment financing loan in five years and the car you buy is designed to last 10 to 20 years or longer, leasing new vehicles every few years may make more sense for your bottom line.

Equipment finance allows you to begin or extend your vehicle fleet, which can help you expand your business. You can serve more customers, send more products or freight, and make more deliveries with additional cars. All of this translates to increased revenue on your business’s income statement.

 

8. Improvements and upgrades to the structure

A last equipment expense category includes your business’s physical location as well as any changes or enhancements you might consider as your business grows.

One of your objectives, for example, could be to make your business premises more environmentally friendly and sustainable. In that case, you may put the money towards:

• Solar panel purchase and installation
• Using a green roof to replace existing roofing
• Putting in an energy-saving HVAC system
• Boilers, chillers, and furnaces that are more energy efficient are being installed.
• Changing to a more energy-efficient hot water system
• LED lights will be used to replace existing lighting.
• Window and door replacement
• Using green materials to replace current insulation
• Putting in place an automated control system to manage energy consumption

 

These types of enhancements have two advantages. First, they can save your business money by lowering energy expenses, freeing up funds that can be put to better use. Second, these steps can help you lessen your environmental impact.

Equipment financing might result in a positive return on investment (ROI) for your business.

Equipment finance might assist you in speeding up the process of expanding your business. Consider what you stand to gain if you’re not sure if equipment financing is good for you. For example, if purchasing a piece of equipment allows you to reduce the time spent on invoicing and payroll each workday, or if adding a new vehicle to your fleet allows you to deliver products to clients faster, your business will gain.

 

Before committing to a loan, evaluate your equipment financing alternatives from many lenders to ensure that you’re obtaining the best rates for your business. G-Force Funding can give you a free equipment financing quote to see what you qualify for without affecting your credit score.

Apply today with G-Force Funding for business loans and equipment loans from $10,000 – $1,000,000.

 

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The Businesses Owner’s Guide to Equipment Financing

 

 

 

 

 

 

Having the right equipment for your business, whether it’s a product or a service, is critical to keeping it running properly. Replacing, upgrading, or purchasing equipment for the first time can place a strain on your cash flow, but with the appropriate equipment financing, you can receive the equipment your business requires without breaking the bank.

Equipment financing comes in a variety of formats, and what works for one company may not work for another. You will have a better grasp of: after reading this guide:

• How does equipment financing work?
• How do the various financing options stack up?
• What are the advantages and disadvantages of each?

 

What is the definition of equipment financing?

Equipment finance is a type of financing that is tailored to the acquisition of commercial equipment. Your business manufactures monthly payments toward the debt, and after the obligation is paid off, you own the equipment outright. Certain methods of equipment financing use the equipment as collateral, allowing the lender to take possession if you default.

The lender may impose a blanket lien or seek a personal guarantee, depending on how the financing agreement is structured. If you default, a blanket lien permits the lender to seize all of your business assets, including the equipment. A personal guarantee does the same thing with your own assets, so it’s crucial to know what you’re agreeing to before taking out a loan.

 

Leasing vs. equipment financing

You don’t have to buy equipment if you don’t want to—you may lease it instead. This means you’re paying the equipment’s owner rent on a monthly basis, just like you would if you were leasing office or retail space for your business. You have the option of renewing your lease or purchasing the equipment all together at the end of the lease period.

Leasing has a benefit over financing in that you are not needed to make a down payment in order to get the equipment, as you would with a loan. In most cases, there are no restrictions for collateral, liens, or personal guarantees. If your business or personal credit is less than ideal, it may be easier to qualify for a leasing agreement rather than financing.

However, there is a possible disadvantage in terms of cost differences. You are not locked in as far as ownership when you lease equipment for a lengthy period of time, but you may end up spending more to rent than you would if you bought the equipment instead.

 

What are the choices for equipment financing?

Small business owners have a variety of options for financing the equipment they require. Several criteria play a role in determining which one is the greatest fit, including:

• Your personal and business credit ratings 
• How long you’ve been in business 
• Your annual business income 
• The loan amount you want to take out 
• The repayment terms you want to use

With that in mind, consider the following five options for financing equipment:

 

• Equipment Loans

Best for: Newer businesses who seek to expand their operations and need equipment finance.

An equipment loan closely resembles the previous definition of equipment financing. The equipment serves as collateral for the loan, and up to 100% financing is conceivable, but some lenders may need a 20% down payment.

Depending on how much you borrow, repayment durations can be as little as 36 months or as long as ten years or more. Loan limits for equipment loans range from $50,000 to $10,000,000 with an annual percentage rate of between 8% and 30%.

 

Equipment loans can typically be funded in as little as two business days. Because many equipment loan and term loan providers solely operate online and do not have a physical site, underwriting is frequently significantly more efficient. Fill out an application, upload documents like bank statements or tax records, and receive an approval decision in as little as 24 hours. With a traditional bank, you may have to wait days, if not weeks, for your application to be processed. Obtaining an equipment loan does not necessitate having perfect credit. Lenders often expect you to have been in business for at least one year before applying, so if you’re still in the startup period, you may have a harder difficulty qualifying.

 

• Term Loans

Best for: Businesses that have a steady stream of revenue and need to borrow up to $1 million.

Small business owners who require immediate financing for an equipment purchase can consider term loans. Term loans, like a mortgage or a vehicle loan, are repaid over a specified length of time as their name suggests. Annual percentage rates are similar to those for equipment loans, and they can be fixed or variable.

Term loans are either secured or unsecured, depending on the amount borrowed. If you don’t want to utilize the equipment as collateral, you might have to replace another business asset.

Term loan lenders may have more strict credit requirements than equipment loan lenders. For example, an equipment loan can be obtained with a credit score as low as 600. To qualify for a term loan, you must have at least two years of business experience, generate at least $200,000 in yearly revenue, and have a personal credit score of 660 or higher.

While the approval criteria may appear to be more strict, this can work in your favor if you can use a higher credit score to qualify for a cheaper interest rate. You might also be able to negotiate a lower origination fee, lowering your borrowing costs even further. Even a one-percentage-point difference in the APR or the origination charge can save you thousands of dollars over the life of the loan.

 

• CDC/504 loans from the Small Business Administration

Best for: SBA-eligible businesses in need of up to $5.5 million in equipment financing.

The Small Business Administration offers many lending programs for small business owners, including the CDC/504 Program, which can be used to finance equipment acquisitions. For-profit businesses with a tangible net value of less than $15 million and after-tax revenues of less than $5 million in the previous two years are eligible for this program.

The CDC/504 loan, in contrast to equipment or term loans, has higher lending limitations. Businesses that meet the criteria can receive up to $5.5 million in finance, with loan durations of up to 20 years. A personal guarantee is also required in addition to the equipment.

A fee of 3% of the loan amount will also be charged to business owners. The fee alone would add $165,000 to the cost of borrowing the maximum amount of $5.5 million. However, in terms of percentage, this is comparable to what other lenders charge for equipment or term loans.

The 504 loan offers the longest funding horizon of the five alternatives. The various stages of the application and approval process, as well as receiving the loan profits, can take up to 8 weeks. If you need to buy equipment quickly, this is a huge drawback.

 

• Small business line of credit

Best for: Businesses in need of quick and flexible equipment financing

A business line of credit works similarly to a personal or home equity line of credit in that the bank makes a specific amount of money available to you that you can use over and over. If you operate a well-established business with a proven track record and an excellent credit score, you may be eligible for a line of credit of up to $1 million.

Business lines of credit might be repaid in a few months or over a five-year period. Funding can be completed in as little as a few days, and a low credit score isn’t usually a huge stumbling block to approval. However, this means you’ll have to pay more in interest.

When it comes to purchasing equipment, business lines of credit lose some of their sparkle when compared to other financing options. Rates might easily be in the area of 36%, which can quickly add up to a significant increase in the cost of your equipment. Because a business line of credit is intended to be used in the near term to address transitory cash flow gaps rather than huge, one-time expenses, it is not suitable for large, one-time expenses.

You may, for example, utilize your line of credit to cover payroll one month and repay it the next, or to stock up on inventory when business is slow.

 

• Business credit card

Best for: Owners of small businesses that want to get rewarded for small equipment purchases

Business credit cards typically offer the lowest credit limits among the financing methods discussed here, with a credit limit of $100,000 in most cases. That isn’t to say that when it comes to purchasing equipment, business owners should completely disregard them.

The potential to earn points, cash back, or travel miles for your business is the main benefit of using a credit card for equipment. If you have a card that earns 3% cash back and use it to charge a $15,000 oven for your restaurant, for example, you will effectively be getting a $450 discount. That’s something you won’t find with any other type of finance.

The interest rates and fees are two of the main drawbacks. APRs on credit cards are frequently in the double digits, and annual fees on rewards cards are not unusual. If you can’t pay off the item in a reasonable amount of time, the interest could overshadow the value of any benefits you get.

If you’re dealing with an equipment vendor who refuses to accept credit card payments due to merchant costs, you might have problems. If the vendor accepts credit cards, they may pass the cost on to you, making a credit card more expensive than a term loan, for example.

 

Consider all of your possibilities.

When looking into equipment financing, there are a few factors to keep in mind to assist you decide which course to take. Take a look at the entire cost of borrowing first. A low interest rate may be enticing, but you also need to consider if you’ll have to pay a loan origination fee or an annual maintenance fee, which could increase the overall cost, which is why it’s better to focus on the APR, which includes all loan fees.

After that, consider the payback terms. A shorter period implies the debt will be paid off sooner, but it may also mean a higher monthly payment.

If you choose a longer term, your payments will be lower, putting less burden on your monthly cash flow, but your total interest will be higher until you’ve paid for the equipment in full.

Finally, have a look at the lender’s approval conditions. You must ensure that your credit scores, time in business, and annual revenue all match the minimum requirements. You should also know whether a down payment or additional collateral than the equipment is required, as well as the lender’s stance on personal guarantees or liens.

Apply today with G-Force Funding for business loans and equipment loans from $10,000 – $1,000,000.

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Equipment Financing Can Help Your Business in 8 Ways

 

 

 

 

 

 

1. NEW EQUIPMENT IS REQUIRED

Clearly, the most common reason for business owners to seek equipment loans is to purchase new equipment. You might require a new forklift to handle a major project, a wood burning fire to add pizza to your restaurant’s menu, or new office computers to streamline employee activities, depending on your industry. Whatever type of equipment you require, an equipment loan might assist you in making the purchase.

 

2. TO BE COMPETITIVE, YOUR EQUIPMENT REQUIRES AN UPGRADE

In some circumstances, you may require new equipment to replace outdated equipment or to extend your service offerings. Alternatively, you may need to invest in new equipment even before a pressing need arises. You may need a business loan to invest in your business if you need more efficient equipment to improve procedures, maintain industry competitiveness, or meet customer needs.

 

3. REPAIRS ARE NOW UNSUSTAINABLY EXPENSIVE

Compare the estimated repair expenses to the cost of purchasing new equipment if you need to fix old equipment. Repairs can be more expensive than replacements in a surprising number of circumstances, especially if they don’t address the root of the problem.

Do you think repair expenses will outpace replacement costs before the equipment’s lifespan is up? Do you find yourself frequently maintaining the same piece of equipment? Consider these financial factors when determining whether an equipment loan has a higher long-term rate of return and is more reasonable than periodically repairing obsolete equipment.

 

3. YOU DON’T WANT TO APPLY FOR A TRADITIONAL BUSINESS LOAN WITH A LOT OF DOCUMENTATION

Another reason why business owners employ equipment loans is that they don’t have the time to go through the standard loan process. To get a business loan, you’ll usually need to prepare a business plan, create detailed balance sheets, and go through a lengthy assessment procedure. Because an equipment loan’s collateral reduces risk, these loans typically require less documentation, which might be crucial if you’re seeking to save time and money.

 

4. THE LOAN REQUIRES A DOWN PAYMENT

Equipment loans often need a down payment of up to 20% of the equipment’s purchase price, though terms and conditions vary. As a result, if you don’t have enough money for a down payment, you can be turned down. Some lenders, on the other hand, will cover the entire cost of the equipment for customers with excellent credit or in exchange for a higher interest rate.

 

5. YOUR TAX BURDEN WOULD BE REDUCED IF YOU BOUGHT NEW EQUIPMENT

When you buy new equipment, you may usually deduct the cost as a business expense, and if the purchase qualifies for the section 179 deduction, you can deduct the entire cost in the year of purchase, up to $500,000, rather than depreciating it over time. This is true even if you finance the purchase with an equipment loan. As a result, you may be able to deduct the entire cost to reduce your taxable income and hence your tax liability on paper, but you can still save money by paying for the equipment over time.

 

6. LEASING EQUIPMENT DOESN’T MAKE SENSE FROM A FINANCIAL POINT OF VIEW

In many circumstances, leasing a piece of equipment is a better option than buying it. This is the same thing as leasing a car. You pay a monthly or recurring leasing charge and return the equipment at the end of the lease term. You may be charged for any damage that occurred while the equipment was in your possession at that moment, but you also have the option to purchase the equipment, usually at a reduced price. Calculate the cost of an equipment lease before accepting it, and if an equipment loan is cheaper in the long term, go for it.

 

5. YOU WOULD LIKE TO KEEP WORKING CAPITAL

Equipment loans aren’t always used by business owners who don’t have a lot of cash on hand. In many circumstances, these business owners could just write a check to cover the cost of the equipment. A large equipment acquisition, on the other hand, has the potential to deplete your working capital. If you want to keep your working capital safe, get an equipment loan and keep your business bank account well-stocked to cover payroll, utilities, marketing, and other needs.

There are several indicators that you may require an equipment loan. In addition to the reasons stated above, thoroughly examine the return on investment before making your ultimate selection. How would the equipment help your business? Will it result in an increase in revenue? Save time and money on payroll? Do you want to lower your tax bill? After you’ve laid out the financial rewards, look at the cost of the loan and determine whether the purchase will provide you with the long-term return on investment you require.

 

Note: Your cash flow statements, also known as profit and loss sheets, indicate the revenue you get and the expenses you incur. The difference between the two, as well as other elements like fixed costs, is used to calculate your profit margin.

 

While traditional loans can help small and online business owners, the time it takes to apply for a loan, process it, and wait for a decision can be inconvenient. The majority of small business owners require funds immediately in order to replace, refurbish, repair, or upgrade equipment. You’ll be able to position your small or online business for sustainable growth in the years ahead after you understand how to acquire an equipment loan.

Apply today with G-Force Funding for business loans and equipment loans from $10,000 – $1,000,000.

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The Business Owner’s Guide To Equipment Loans

 

 

 

 

 

 

Any small, or large, business will need to upgrade, improve, or replace certain pieces of equipment at some point. Equipment loans are a lifeline for any business owner in this situation. When it comes to running a small business, they might be the difference between success and failure. However, you may be wondering what the advantages of equipment loans are and how to obtain one. What factors do lenders use to decide whether or not to accept equipment loans?

 

Let’s start by discussing what equipment loans are and why you might need one.

 

What is the definition of an equipment loan?

Loans for the purchase of business equipment are known as equipment loans. To process, manufacture, or generate their product, businesses may frequently need to buy, replace, repair, or update numerous types of equipment. Medical and dental medical equipment; restaurant ovens, cookware, tables and chairs, linens, and catering supplies; phone systems; computer monitors, printers, copiers; furniture, tools, commercial vehicles, specialized machinery, industrial equipment, and more are all examples of equipment. All of this equipment is required for your businesses to run at peak efficiency and productivity.

 

But what if your equipment is old, outdated, and in need of replacement? You may have the option of purchasing new equipment altogether or leasing it.

 

Are you looking for a loan or a lease?

When it comes to business equipment loans, keep in mind that you can also lease the equipment. Here are some things to think about while deciding between leasing and acquiring an equipment loan.

Equipment Leasing Most equipment leasing contracts do not need a down payment. This is especially advantageous for businesses with limited or no capital. If a down payment is necessary, it is usually tiny in comparison to what would be required for a standard loan.

You can finance roughly 100% of the cost of the item or goods plus around 20% – 25% of the so-called “soft costs” with a lease. Taxes and delivery fees are examples of soft costs.

Leasing allows your small or online business to be more flexible. You have the choice of returning the item at the conclusion of the lease or purchasing it for a modest fee once the principal of the loan has been paid in full.

 

Equipment loans

Each lender’s terms will vary, but on average, you can finance roughly 80% of the total purchase price of an item with a loan. When you buy your equipment and finance it with a loan, you own it from the start.

For the majority of small business equipment loans, a 20% down payment is usually required. The item or goods you buy with the equipment loan serve as collateral for the loan.

 

Why Take Out a Business Equipment Loan?

• To replace/upgrade obsolete or out-of-date equipment
• Add to your existing inventory of equipment.

 

How to Get a Loan for Business Equipment

Most equipment loans demand excellent credit. After all, it’s a financial investment in your business’s growth and profits. You might choose to apply for a loan at the bank where you now do the majority of your business. You could want to look into a nontraditional lender like G-Force Funding, an online lender that helps small and online business owners that need quick funding to build their business. Business loans from G-Force Funding – sometimes known as G-Force Funding lines of credit – could be a viable choice. A business loan provides cash to a business in exchange for a percentage of future credit card sales.

 

A business loan may be a particularly suitable alternative for your small or online business if you have had strong sales but have little or low credit. Getting the financing you require when you require it can spell the difference between your business’s success and failure. 

 

Note that if you have a prior bankruptcy on your record, your business has been in operation for less than a year, or you do not currently have the ability to process credit card payments for your customers, you will most likely be denied a line of credit for an equipment loan. Before you apply to a traditional lender or a nontraditional lender like G-Force Funding, be sure you have all of these items in place.

 

Banks and other traditional lenders are typically hesitant to issue standard equipment loans to small or online businesses with poor or bad credit. Such businesses may be regarded “too hazardous” and will have a tough time obtaining a standard bank loan to fund their operations. This can be an issue for many small and online business owners who require money to buy, replace, or repair old or malfunctioning equipment. A business loan can help in this situation. A business loan provides you with the funds you require in a timely manner, allowing you to continue running your business’s day-to-day activities.

 

The Advantages of Equipment Loans

Approval in a flash –

• Equipment loans are typically authorized (or denied) promptly. Consider applying for a small business line of credit with a nontraditional lender like G-Force Funding to expedite the process. G-Force Funding is an online lender that provides quick cash for a variety of needs, including inventory, equipment upgrades, and marketing campaigns. In addition, G-Force Funding considers your request in a matter of minutes. That means you’ll have the extra cash you need sooner, allowing you to buy or replace the equipment you need.
• Monthly payments on your equipment loan may be deductible as a “operating expenditure” for tax purposes. To be sure, check with your lender and a business tax attorney.
• You’ll have more money in your pocket – Keep cash on hand in case you need to make any more purchases for your business. Consider the situation in which one of your delivery trucks breaks down and needs to be replaced. Alternatively, your restaurant’s oven may be malfunctioning. Equipment loans can be used to replace or repair this very expensive – and critical – piece of equipment instead of using money from your business’s profits to pay for it.
• Payment Schedule Flexibility – You may be able to take advantage of flexible payment choices depending on the lender with whom you acquire your business equipment loans. This is useful while you strive to replace the equipment, keep your business going, and make payments on your business equipment loans. Depending on the sort of loan you obtain, some lenders may give you the choice of making monthly, seasonal, quarterly, biannual, or even annual payments. Note that you might be eligible for a 90-day delay on your equipment loan repayment. When it comes to equipment loans, consult with your lender to see what works best for your business.
• About a quarter of “soft costs” are covered — Fees, delivery charges, and freight charges are examples of soft expenses. Again, each lender is unique, so do your homework to find out exactly what fees are associated with the loan and which fees you will be liable for paying.

 

The Procedure for Obtaining an Equipment Loan

As your business grows, you’ll need to refill inventory, perform daily, monthly, and annual maintenance on important equipment, and ensure that your product or services are delivered on time. Small and online business owners might benefit greatly from equipment financing.

 

Step 1: Check your credit report to see if it’s in excellent shape.

Have you ever had a problem with late credit card payments? Have you missed payments on some of your loans? Do you have a terrible credit history? When you apply for equipment loans, all of these factors will work against you. Most lenders will not give a small or online business a loan if they believe it is too risky. Having excellent credit is one of the most critical – if not the most crucial – small business financing requirements. The importance of preparation cannot be overstated. Make sure you’ve done your homework ahead of time. Know your FICO score, which is a summary of your credit risk used by lenders to decide whether or not to offer credit and, if so, at what rate. Using free web resources like www.fico.com, you may determine your credit risk and determine your FICO score.

 

Prepare to exhibit not only your corporate credit history, but also your personal credit history when meeting with potential lenders. Do you have credit card debt? A couple of missed automobile payments? Are you in default on your student loans? These kinds of issues will cause the equipment loan approval procedure to be delayed, if not completely halted. In order to get a small business loan, you’ll need to have good credit. Work hard to improve your credit and correct any credit reporting issues (*Note: credit reporting inaccuracies do happen. Take the time to thoroughly study your credit reports to verify accuracy. Any irregularities should be reported as soon as possible).

 

Step 2: Create a well-thought-out business plan.

Lenders, both traditional and nontraditional, may examine your business plan as a guide to your future success. Determine the nature of your business. Give a brief description of your product or service. Detail your present cash flow system and set a bold, but achievable, set of goals for your business’s future expansion. Identify your target market, as well as the socioeconomic and demographic characteristics of your core market, and then detail how your product or service will meet a need in this market. Finally, at the very beginning of your business plan, describe your complete business strategy in a few paragraphs and title it the “Executive Summary.” This will provide lenders with a good overview of your business. A strong business plan doesn’t need to be hundreds of pages long. It should, however, be thorough and well-considered. There are numerous business plan templates and examples available online. Find one that works for you and put it into action as part of your equipment loan strategy.

 

Step 3: Make sure your personal resume is up to date.

A personal résumé is a fantastic resource to have when applying for equipment loans, even if you aren’t applying for a job. Character attributes that will support the small or online business plan are sought by all types of lenders, including traditional bank-based and atypical lenders. They want to meet the person who runs the business. And, because you’ll be accountable for the loan’s repayment, lenders will want to make sure you’re a good credit risk before approving any equipment loans.

 

Step 3: Prepare cash flow statements ahead of time.

Most lenders require you to be able to show your money coming in and leaving out in current terms before they will approve any type of equipment loan. Make sure your funds are in order. Engage the services of a certified public accountant to examine your financial documents. You’ll need to make sure your personal and business financial statements are both in order and bulletproof, which means your reporting is accurate and ethical. It’s one of the best measures of how well your business is managed in the real world, and it’s one of the most important factors lenders look at when evaluating small business loan applications.

 

Apply today with G-Force Funding for business terms loans and equipment loans from $10,000 – $1,000,000.

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