Purchasing, replacing, or repairing equipment can be instrumental in maintaining or growing your business. For some business owners, however, paying for the item outright is simply not possible or too risky.
To preserve cash-flow and avoid liquidity challenges, consider using an equipment loan to finance the expense. Here’s what you need to know about the option.
What is an equipment loan?
As the name suggests, this loan helps business owners finance equipment – machinery, a vehicle or fleet of vehicles, office equipment, construction equipment, etc. Equipment needs vary by business, but are considered essential to its success.
How does it work?
The equipment typically serves as collateral, making equipment loans a type of secured loan. The borrower is generally required to make payments, which include interest and principal, over a fixed term. At A+FCU, the Loan-to-Value (LTV) on this type of loan is 80%.
What are the benefits?
Equipment loans tend to have lower interest rates when compared to unsecured loans, like working capital loans. Additionally, A+FCU offers terms of up to 5 years with no prepayment penalties. Most importantly, you’re able to grow your business, spread the costs out, and add to net value.
How do you get one?
It’s best to conduct research and select the equipment you’d like to purchase before submitting a loan application. Many lenders will require a quote along with details about the equipment and its condition. Do you want to learn more or apply?