How Equipment Loans Work

When you need equipment for your business, getting a small business loan can be a smart move. These loans allow you to buy any type of business equipment, but how much you can borrow depends on the equipment you’re buying and whether it’s new equipment.

If you’ve had a car loan, you have a basic idea of how an equipment loan works. The equipment serves as collateral to secure your loan, so you won’t have to put up extra collateral. Most equipment loans for small business are usually fixed interest rate loans, between 8% and 30%. They also offer a fixed term length so your payments stay the same.

The nature of the equipment and its expected life affect how long you can extend the term of the loan. Few lenders are willing to extend the term of the loan beyond the equipment’s life expectancy.

An alternative option is to lease equipment instead of getting a loan. There are advantages to leasing, but with an equipment loan, you can own the equipment after you’ve paid off the loan.

Business Equipment Loan

The equipment you’re looking for is critical to your business operations and future growth. Being able to get the right equipment allows you to provide reliable and accurate service for years. The question arises…should you buy or lease? You’ll need to consider the depreciation of the equipment, the long term and short term costs, and tax benefits. You usually want to buy the equipment if it depreciates over 5 to 10 years. If you need technology and equipment that needs frequent upgrades, then you’ll want to lease it. Either way, Certified Business Loans can help you get the business equipment loan you need.