Whether you run a landscaping company, a medical practice, or another equipment-dependent business, there will likely come a time when your current equipment can no longer keep up with demand. You may need to add another truck to your fleet or replace an aging X-ray machine to continue serving your customers or patients.
But you can’t upgrade your equipment at the expense of your other finances. Draining your cash reserves or tying up the working capital you depend on for daily operations cripples your business in the long run.
Equipment financing and leasing can spread the cost of your new assets out over time and protect your cash flow. With an equipment loan, you borrow the purchase price of the equipment upfront and pay the lender back with interest. You own the asset the whole time. Equipment leasing is more like a rental agreement. You pay a monthly fee to use the asset over a set term.
Equipment financing companies help you access the equipment you need while keeping your business financially comfortable. You can adjust to demand without threatening your operations.
Equipment Leasing
When you really want to protect your working capital and cash reserves, start with equipment leasing. It rarely requires a down payment, keeping upfront costs low. Instead, you can save your cash to purchase equipment at the end of your lease, once you know whether it will still serve you well.
Manufacturers, commercial kitchens, corporate fleets, technology-based companies, and others often choose equipment leasing to stay up to date. For example, the best landscaping business loan companies may recommend leasing heavy equipment, such as zero-turn commercial mowers and skid steers. It can provide you access to the latest technology during the busy season and allow you to save money during the off-season by returning the leased asset at the end of the term.
Equipment leases often come with a useful tax advantage as well. You can often deduct lease payments as business expenses in the year you incur them, making the effective cost lower than that of a loan. But always confirm the specifics with your accountant before making tax-related decisions.
SBA Loan Programs
When it comes to equipment loans, the Small Business Administration (SBA) 504 and 7(a) programs can offer lower down payments and longer repayment terms than most options. Government backing allows approved lenders to offer these competitive loans.
SBA loans built for purchasing equipment typically require a down payment of around 10%, rather than the 20% to 30% many conventional equipment loans require. And with repayment terms that can last several decades, your monthly payments stay manageable even on larger loan amounts.
SBA applications require more documentation and a longer approval process than most other lenders. But if you have a strong financial profile and can qualify, the low-cost equipment loans often justify the additional time and effort.
Equipment Loans
When you really need to own your new equipment and can’t wait for an SBA loan, an equipment loan can still get the job done. Just pay close attention to how the terms will affect your cash flow.
Look for financing options that allow you to preserve more of your cash liquidity. Ideally, you want a product that lets you avoid investing a lot of money up front to lower the monthly payment. That structure keeps funds on hand for emergencies.
Pay attention to the repayment schedule. A payment schedule that stretches too far can increase your costs, while one that is too short can strain your monthly budget. Some equipment loan companies can even fit the repayments to your business. Equipment financing for construction companies, for example, allows contractors to defer payments for a few months until their new asset generates a return.
Top Equipment Financing Companies
Lenders take different approaches to equipment financing. Some specialize in equipment loans, while others provide access to a broader range of financing options. Whether you need new salon chairs, commercial machinery, vehicles, or technology upgrades, these lenders offer solutions that can help you invest in your business without putting unnecessary pressure on your cash flow.
Cardiff
Cardiff offers both operating leases and equipment finance agreements (EFAs), which function as loans, giving you the flexibility to choose based on how long you plan to use the equipment and whether ownership is a priority for your business.1
But instead of relying on credit scores and time in business for underwriting, Cardiff focuses on your cash flow, industry experience, and overall health of the business. This approach means you may secure financing even if you’re a start-up or a seasonal business and receive funds the same day you’re approved.1
Cardiff structures its equipment financing products with low upfront costs and flexible repayment schedules. You typically don’t need any down payment or additional collateral because the asset secures your financing. And Cardiff offers ramp-up schedules, payment deferrals, revenue- or seasonal-based repayments, and predictable payments so you can tailor the financing to your cash flow cycle.1
And when you make timely repayments on your financing, Cardiff can approve you for an equipment line of credit. This product allows you to draw up to a credit limit, pay interest only on what you use, and access the capital again after you repay the loan. It can help protect your working capital from the unexpected costs associated with new equipment.1
The combination of fast access, low upfront costs, cash flow-based underwriting, flexible repayments, and equipment lines of credit makes Cardiff a practical choice if you need to protect your working capital and upgrade your equipment.
National Funding
Specializing in small business equipment financing, National Funding designs loans and leases to be convenient. You apply through a straightforward digital application, connect with your funding specialist about your options, and receive capital in as little as 24 hours.2
National Funding is committed to offering the best terms in the equipment leasing market for both new and pre-owned assets. And this lender doesn’t require any down payment on equipment loans, keeping upfront costs low as well.2
National Funding will allow repayments as short as one year and as long as one decade. You can also negotiate flexible repayment terms with your National Funding Specialist, though how you can alter your schedule depends on your specific situation.2
If you want low-cost equipment leases or streamlined loans for pre-owned assets, National Funding has the experience and personnel to support your operations and your upgrades.
Kapitus
Kapitus helps businesses avoid high upfront costs by financing equipment over $20,000, with no maximum funding amount and no down payment requirements. You can finance up to 100% of the costs of very expensive machinery or vehicles and spread the cost out over 72 monthly payments.3
Kapitus works with industries of all kinds and will finance both new and used equipment. You do have to work with a licensed dealer for your equipment to be eligible for a Kapitus loan or lease.3When you’re ready to invest significant capital in your equipment but still need to protect your cash reserve and monthly budget, Kapitus is a strong option.
Lendio
When you want to compare multiple equipment financing offers at once, look at Lendio. It is a lending marketplace that connects you with over 75 lenders. You can view real loan and lease offers from alternative lenders, banks, the SBA, equipment financing companies, and online platforms in one place.4
Lendio speeds up the comparison process, and approved borrowers can often secure funding within 24 hours.4 You even can explore different equipment financing options on a tight timeline with Lendio.
Equipment and Growth
Because each product offers different pros and cons, many businesses use more than one of these tools over time. You might lease your point-of-sales (POS) system from National Funding, secure a loan through Cardiff for a new trailer, and find the right SBA loan to purchase a backhoe through Lendio.
The right path depends on your timeline and your ownership goals. And when you evaluate the equipment financing companies based on who will preserve your cash reserves while funding the assets you need, you lock in both the equipment and a path to business growth.
1https://cardiff.co/business-loans/products/equipment-leasing/
2https://www.nationalfunding.com/equipment-leasing/
3https://kapitus.com/products-services/equipment-financing/
4https://www.lendio.com/business-loans/equipment-financing