Equipment Secured Business
Loans
As has been one of the common
themes through our article discussions, banks and finance companies love to
provide business loans that are secured by tangible goods such as equipment and
real estate. This is, again, because in the event of a credit default they will
be able to recoup a majority of their principal by taking possession of the
secured property with the intent to resell it. In regards to equipment business
loans, there are a number of different avenues that you can take in order to
acquire the equipment that you need for your business. In many instances, the
equipment seller or manufacturer will have a number of lenders that they can
refer you to when you are looking for business loan specifically for equipment
purchases. Major corporations and manufacturers often have their own in house
financing programs that you can apply for when purchasing large scale equipment.
This is especially true for machinery that costs in excess of $25,000.
Equipment loans, as compared to
traditional loans, are much easier to obtain as there is fully security for the
lending party for the equipment they are providing to you. As an alternative to
equipment loans – there is the equipment lease. Much like a business loan, you
will be required to submit a formal application and you may be required to
present a business plan. However, full title for the equipment (should you
decide to lease it) remains with the finance company or manufacturer that is
providing you with the equipment. Additionally, the full cost of the lease is
generally deductible for tax and accounting purposes. This is because you are
not purchasing the equipment. In a lease situation, you are paying for the
depreciation of the equipment plus an interest rate tied to the
depreciation of the equipment.