There are a lot of misconceptions when it comes to how equipment financing works, which can hurt business growth. Perhaps you think that equipment financing is too expensive, or that the process is too slow, or that you don’t qualify because you don’t have a perfect line of credit.
These equipment finance myths may have been true once, but the application and approval process is now faster and easier than ever before. Your business may be booming, but if you cannot find solutions to purchase equipment, how can you meet growing customer demands?
Financing is not the difficult process it used to be, so it’s time to debunk those old myths. If you’re still not sure how your business can purchase equipment, get in touch with an experienced partner like Team Financial Group. Our team would love to answer all your finance-related questions and equipment financing options.
Myth 1: Only Businesses With Great Credit Scores Qualify for Financing
A traditional bank may have stringent requirements or certain metrics that must be met, but independent partners like Team Financial Group understand that these don’t always define a business.
For established businesses that don’t have a perfect credit score, or new businesses with no credit history, an independent lender can meet you where you’re at. A credit score is just a number, and it doesn’t always tell the whole story. A financing partner will listen and customize an equipment financing plan based on your specific business needs and financial history.
Myth 2: Equipment Financing is Too Expensive
An independent commercial lender will work with you to understand your financial situation. A good lending partner will help figure out an affordable solution that maximizes your cash flow. They can offer more aggressive terms with competitive interest rates to help meet your budget.
In fact, according to a report published by the Equipment Leasing & Finance Foundation, 47% of businesses said that optimization of cash flow was one of the big reasons they chose financing vs. paying cash for new or used equipment. In other words, keeping your cash flow healthy will help keep you in business.
RELATED: How Equipment Financing Can Help Your Cash Flow
Myth 3: The Equipment Financing Process Takes Too Long
This myth was true for a long time, and even today traditional lenders may take 60-90 days to approve a small business loan. However, with the rise of online lenders and computer algorithms, the turnaround time for financing has been drastically reduced. A good lending partner will make the process fast and easy. Team Financial Group has approved and funded equipment loans in less than 24 hours.
When growing a business, changes can happen rapidly, like landing a big contract. Don’t let concerns about the length of the financing process prevent you from purchasing the equipment you need to get the job done. The lending approval process is moving faster than ever.
Myth 4: Offering to Finance Equipment Does Not Affect Sales
If you sell commercial equipment, you may think that it doesn’t make a difference to your customers whether you offer equipment financing, or they need to pursue their own business loans. However, many businesses work with monthly budgets. If you are able to partner with a lender and offer financing, you can focus on monthly payments rather than the overall purchase price of new and used equipment. This strategy can lead to more sales and repeat customers.
This equipment finance myth is one of the worst. With almost 80% of businesses utilizing financing to acquire their commercial equipment, working with a lending partner is often critical to closing a deal.
Myth 5: Equipment Financing is Not Flexible
It’s natural to be a little tense about major equipment purchases, especially if you feel like you’re locked into a contract with no wiggle room. However, the right lending partner should put your mind at ease with a customized approach. With a lending partner that understands one-size-fits-all financing doesn’t actually fit every size business, even the most unique enterprises usually can find a financing solution to fit their needs.
Banks are often constrained by risk management formulas, but an independent commercial equipment financing partner can assess your individual situation and offer flexible terms. For example, we might be able to offer you a $0 down payment (100% financing), a $1 buyout lease option, or seasonal payment terms. We are happy to answer all your finance-related questions and find a solution that’s right for your business.
RELATED: 20 Questions: Here’s How Equipment Financing Works
Small Businesses Can Utilize Financing to Fuel Growth
The number one reason many small businesses go under is due to cash flow problems. When a business scales up or experiences rapid growth, the need for additional equipment and staffing resources often precedes the inflow of cash. This creates a cash crunch at the worst possible time – if you can’t keep up with demand, then demand will take their business elsewhere. This is where financing can keep your business in the black.
Financing is a great way to keep your cash flow healthy and allows an extra cash buffer to cover emergencies or opportunities.
Getting an equipment loan or equipment lease may seem daunting if you view it as a negative move. However, if you approach financing equipment as another tool in your toolbox, and partner with the right lender, you’ll see that this is often a strategic move that can keep your small business moving forward.
Small Businesses Can Utilize Financing to Fuel Growth
At Team Financial Group, we want to see small business owners grow successfully. That’s why we work with all kinds of organizations to help them achieve their goals through equipment financing.
Need any more finance-related questions answered or equipment finance myths debunked? Call us at 616-735-2393 or fill out our online form to learn more about how fast and flexible the process can be.
References
Equipment Leasing & Finance Foundation. (2019). 2019 Equipment Leasing & Finance Industry Horizon Report. Retrieved from https://www.store.leasefoundation.org/cvweb/Portals/ELFA-LEASE/Documents/Products/2019HorizonReport.pdf
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.