Starting a new business is an exciting experience filled with both ups and downs. Generating the capital to cover startup costs can be tricky, often requiring you to dip into your personal savings, turning to friends and family for loans, crowdfunding and traditional bank loans. While some of the startup costs can be covered by these financing methods, not all will be.
Equipment is a big expense for most startup businesses. Many asset-based lenders will work with new businesses to get the equipment they need. With a price tag that can range from $5,000 to $500,000 making these large equipment purchases will take some added help from large lenders.
An equipment loan is exactly what it’s name says, a loan used to purchase business equipment. This is a form of asset-based lending, making it easier for businesses with bad credit and unestablished credit history to get financing. Interest rates and repayment terms are determined by your businesses credit rating and personal needs.
The lender will hold a lien on the equipment until the loan is paid in full. If you fail to repay the loan as promised the lender can repossess the equipment and sell it to cover the cost of the loan.