Equipment Financing for Startup Business: Financing and Leasing Options

If you know you’re ready to start your business, the next step, and arguably one of the most important steps, is securing equipment financing. However, it can be one of the most difficult. Don’t worry; plenty of successful entrepreneurs have been there. If you're looking for how to procure financing for your startup business, then you’re in the right place.

Every business is different, but remember that solutions like startup equipment leasing can help cut initial costs and jumpstart your business.

We’ve compiled some of the typical avenues for equipment financing for a startup business, but we also have suggestions that may surprise you, so make sure you read to the end.

8 Startup Financing Options for Getting Equipment

There are various ways to finance or lease your business equipment. If you’re researching how to finance buying a business or a startup, a few of these options can also be helpful.

1. Equipment Leasing

You might be trying to determine how you’re going to get small business equipment. If so, you should look into leasing instead of buying, especially when it comes to equipment leasing.

Leasing allows you access to quality equipment without upfront costs. The best part about leasing your equipment is that as your business becomes more successful, you’ll have paid enough money to give yourself a purchase option, allowing you to own the equipment you’ve been using outright.

At Clicklease, we help entrepreneurs like you lease your industry equipment, so check out all of your options on your journey to leasing for your startup business!

2. Loans

One of the most common ways to finance a startup business is to take out a loan. Choices include personal, business, or equity loans. Just remember that the higher the loan amount, the more challenging it will be to pay off, with more significant consequences if you can’t pay.

3. Business Credit Card

Like personal credit cards, a company can get a business credit card. Funds availability will depend on your financial history and that of the company, if there is any business credit history. These can come with interest payments and other nuances you should consider. If you get too deeply in debt, you may find yourself paying interest fees in perpetuity as you try to pay off the card.

4. Self-Funding (A Debt-Free Option)

Some people may be in the rare position of funding their business independently. There are a few ways you can go about this:

• Use personal savings
• Work a day job
• Use retirement savings
• Use pension funds

It’s essential to note that you’ll be stuck with the bills if things go wrong.

5. Crowdfunding

This type of financing is becoming more common due to the popularity of sites like Kickstarter. The only problem is that if people don’t like your idea, they won’t give you money. That’s why not all crowdfunding campaigns are successful. Be aware that most crowdfunding sites take a percentage of your funding.

6. Grants

Business grants give you access to funds without worrying about interest rates or repaying the money. The catch is that there’s much competition, so you must stand out from the crowd to win the grant. You may also be required to put personal property down as collateral.

Benefits for Startups

Leasing and financing equipment offers several advantages for startups:

• Preserve Cash Flow— Leasing avoids hefty upfront costs, freeing up cash for other business needs like marketing and hiring.

• Access to Better Equipment— You can access higher-quality equipment that boosts productivity and keeps you competitive.
• Simple Terms— Leasing and equipment financing for startup businesses offer simple payment plans to fit your startup's budget and growth needs.
• Tax Benefits— Leasing payments may be tax-deductible, and financing allows for asset depreciation, offering potential tax relief.
• Up-to-Date Technology— Leasing ensures your equipment stays current, allowing for easy upgrades as your business grows.

• Reduced Risk— Leasing and equipment finance for startups often require less personal risk compared to traditional loans, protecting your personal assets.
• No Long-Term Commitment— Leasing offers opportunity to grow, so you can adjust equipment needs as your business evolves.

Step-by-Step Guide to Financing Equipment for a Startup

1. Identify the Equipment You Need

Create a list of essential equipment based on your business plan. Research the costs of new and used options and determine how much capital you will need to cover these purchases or leases.

2. Check Your Credit

Most lenders evaluate your personal credit score if your business is new. A higher score can give you access to better terms, but even lower scores can qualify through alternative options like Clicklease.

3. Explore Your Financing Options

You have more choices than you might think. From equipment leasing to microloans, each option has its own pros and cons. Explore the list below to find what works best for your startup.

4. Compare Rates and Terms

Look at interest rates, loan or lease terms, fees, and monthly payment structures. Make sure the financing option works within your budget and allows room for business growth.

5. Submit Your Application

Be prepared to provide documents such as your business plan, credit history, licenses, and equipment quotes. Some lenders may require more documentation than others.

6. Review and Accept Your Offer

Always read the fine print before signing. Understand your repayment obligations and what happens if your business needs change.

Startup Financing FAQs

If you haven’t found the answers you were seeking while researching how to get small business equipment, keep reading to see commonly asked questions.

What counts as a startup business?

The most significant difference between a startup and a small business is that a startup is still in the first phase of operations and constantly evolving. Startups tend to experience an extended period without making profits because of this.

On the other hand, a small business attempts to establish itself following already successful business models. Their goal is to generate income immediately.

What is the best equipment financing option for a startup?

All the alternatives listed above are startup equipment financing options. Depending on the type of business you’re starting and its needs, some options will work better than others. You may need to consider several financing options to get your business up and running.

There is no “best” startup equipment financing option. Your choice depends on what kind of business you want to start, your available resources, and how much work you’ll invest into getting other resources.

If you have more questions about financing, look at our “Myths about equipment financing” article.

Leasing business equipment with Clicklease is a great way to access the equipment you need to help you get your equipment immediately.

Why is leasing equipment better than renting equipment?

Yes, there are lots of benefits of leasing. With leasing, you often have the option to exercise your purchase option at the end of the lease term. If you choose that option, you will then own your equipment outright, with all the payments you made leading up to that purchase option having gone toward the cost of the equipment. With renting, you are just paying the owner for the right to use the equipment, with no option to purchase. When you lease, you can use the equipment immediately to generate income, and eventually own it, if you choose, as your business grows.

How can you fund a startup with no money?

Even without money, you still have plenty of options. As mentioned before, you can immediately take advantage of leasing options.

Alternatively, a satisfactory credit history will allow you to use a business credit card (but be wary of its pitfalls). Or, you can trade goods and services with other entrepreneurs.

Can you get a small business loan for a startup?

Yes, you can get a small business loan for startups if you qualify. Each lender has different requirements, so read their rules carefully.

Just remember, it can be hard. Most lender institutions require a positive financial and credit history. While you may technically be able to get a business loan with no money down, most of the time you’ll need to offer collateral like your home or car, or deal with higher interest rates.

Where can I find startup business grants?

There are many places to find business grants. First, check out the U.S. Chamber of Commerce and U.S. Small Business Administration websites.

Get Your Business Started with Clicklease

You can skip the annoying business paperwork and get your company up and running with Clicklease. Our customers love that they can access up to $25,000 worth of small business equipment in just a few minutes. If you have bad credit, limited financial history, or no established business plan, Clicklease can help you. Apply in less than five minutes today!

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