Equipment financing makes economic sense only when you have to instantly use an important company’s equipment to function but do not have enough money to buy it. Many people are often trapped in a vicious cycle of asset allocation – first, get the capital; then buy the equipment and if it fails to deliver; then try to de-allocate it from other assets that are equally important.
This is when one realizes that they need another investment that can solve their problems. There are several ideas that one can use to obtain this required funding. We have listed some of these suggestions in the following paragraphs below.
First and foremost, one should keep in mind that two years is the minimum period required for a business loan option to be approved by banks. If you need a small amount of equipment financing within this period, you can make use of the revolving credit facility offered under the credit facility scheme of your bank.
In this case, you should ensure that you obtain at least a 3% rate of interest. This will reduce your capital cost considerably and help you achieve your short-term goals easily.
The second option is to make money through stock market investments. One can make money by borrowing funds from online lenders or investors who are willing to provide ancillary financial services that can help you achieve your short-term goals.
To do so, you will need to make sure that you have a sound understanding of the stock market and the ups and downs of the market as well as the general conditions of the business world. An online lender or investor who understands stock market activities and the risks involved in such investments can easily provide you with valuable advice regarding equipment financing.
Thirdly, you can go in for a co-signing agreement with experienced bankers or private investors who can act as your angel investor network. The presence of your angel investors provides you with an opportunity to get access to traditional financing circles without necessarily having to rely on high street lenders.
The presence of experienced private investment firms can help you raise a large amount of money quickly. However, you should make sure that you get the best financing possible from highly reputed online lenders and investors who have been in the business for quite some time.
Although most online lenders will carefully analyze your business plan and will offer good advice regarding the various financing options available, you should not ignore the importance of assessing your credit score.
Your credit score is an important indicator of your credibility and ability to borrow adequate amounts of capital. A poor credit score indicates that you may be a high-risk investment. Such individuals will not be able to get adequate financing from traditional lenders. Equipment financing for startups can be very useful to such startups.
Since most of the lenders offer the service of equipment financing for startups, you should prepare a strong business plan for the same. You should ensure that the financial provisions you have estimated in the business plan should be feasible and achievable. This implies that you should draw up a detailed budget and identify the revenue sources that you can tap into.
To get the best deal possible, you should access the services of experienced finance experts. These professionals will help you overcome the various problems that you will face during the process of raising finance. The capital raised through this method will be used to purchase your required business equipment.