Once you’ve decided to purchase your equipment through a loan, the next thing is to decide which lender to work with. As know, most lenders will take the time to review your credit score and financial statements. This will help them obtain an appropriate interest rate, as well as the terms and conditions for your loan.
Because the equipment is your collateral, the interest rate on your loan will likely be lower compared to a traditional bank loan. This is because if you are unable to repay the loan, the lender has the right to repossess the equipment and sell it to recover the unpaid balance. There are many benefits of equipment financing for your business.
There are several things lenders look at before considering your business loan application. However, each lender has its criteria for qualifying applicants.
One of the things they will look at is your credit score. Some lenders may choose to look at both your business credit history and business bank statements. The higher your credit score, the greater the chances that the loan will be approved.
On top of that, some lenders will also ask you to make a down payment of 5-25% of the total amount. This will depend on your other qualifications.
Lenders may also want to know how long you’ve been in business before making that decision.
- expanding fleet: One of the reasons people take out business loans is to expand their operations. According to recent research by a few Institutes, trucking companies with larger fleets get more return on their investment. In case you currently have fewer trucks or equipment, it means you will have turned down a lot of jobs due to lack of capacity. Taking out a business loan to purchase more trucks or equipment will increase your ability to handle more work, thereby generating more income.
- improvement in technology: Technology advances every day and you need to constantly upgrade your equipment and trucks. Because upgrading to new technologies is expansive, the best alternative is to apply for a business loan.
- Save on inventory: In most cases, buying equipment or items in bulk can help save money. Instead of buying things individually, you can combine them and buy them all at once. Before you decide on an equipment loan, it’s important to know exactly what you need to add. This is to avoid taking too much or too little. If possible, talk to a professional to determine the exact cost of the equipment you want to purchase.