How To Finance Heavy Equipment for Your Business
If your business uses heavy equipment regularly, then you might be looking for ways to save money on financing costs. Paying for heavy machinery to run your business can sometimes be cumbersome. If you’ve had difficulties with getting approved for conventional bank loans, then you might be looking for alternative financing.
Asset-Based Heavy Equipment Financing
When you need heavy equipment to run your daily operations, you must find a way to pay for the machinery. Asset-based heavy equipment financing is helpful for business owners who haven’t been able to qualify for other types of funding. It works by allowing entrepreneurs to use the value of all the assets in their business to secure financing. The total amount of all assets added together is the total amount of the potential credit line a business owner can take out to use for funding. Assets usually include the business inventory and unpaid invoices.
Advantages of Asset-Based Financing
Asset-based equipment financing works like a credit line. Credit lines work like a credit card where you are given a total credit limit and you only pay interest on the amount you spend. This gives business owners the flexibility to use the credit to purchase equipment, and when the revolving line is paid off, they can free up the credit again to make another purchase. Business owners can also use this kind of funding to restructure or refinance current debt depending on the lender’s policies.
Securing Asset-Based Financing
When you’re ready to go to the bank to apply for your equipment financing, make sure you have all your documents in line. You will need to show the lender proof of the value of all your assets. It’s also a good idea to choose a lender that is familiar with your specific kind of equipment. Don’t be afraid to look closely at the terms the lender gives you. Make sure the language of the contract isn’t too obscure, and beware of hidden costs. Look at the terms that you were given when you first applied. Make sure these terms match when it’s time to sign the documents. Lenders can sometimes sneak extra costs into your contract that could end up costing you much more money than you’d originally expected.
Have all of your paperwork together and read the bank’s terms closely. Once you’ve gotten your credit line, you’ll be on your way to having a better business.