The COVID-19 pandemic has impacted the global economy, causing many small businesses to close shop. Among the ones still in operation, many are now scrambling to adapt to the new normal, looking for ways to offer more value to customers. Unfortunately, this has been challenging due to the economic crunch that has left many strapped for cash.
One solution to this problem is small business equipment financing. Investing in the right equipment can help create new opportunities to grow your business and thrive, even in a tough economy.
Available Financing to Small Businesses
When it comes to financing, businesses generally have two options—debt and equity. Equity financing refers to seeking additional funding from organizations or individuals in exchange for ownership or controlling interest in the business.
Debt financing is another strategy commonly used by small businesses. Taking out loans, opening credit lines with financial institutions, and using credit cards are good examples of debt finance. Debt funding lets you maintain control over your company; however, you will have to pay back the money you borrowed with interest.
But as lenders tightened their requirements during the economic downturn, access to credit has become difficult, more so for smaller businesses and start-ups. Fortunately, there are still viable alternatives when you need to invest in equipment.
How to Finance Business Equipment
Today, most US companies use financing to acquire equipment, machinery, software, and tools necessary for operations. However, equipment financing for a small business doesn’t always have to be through lending. Leasing is another method.
Equipment leasing makes it possible for small business owners and start-ups to afford equipment otherwise too costly to buy. You don’t have to pay cash upfront since there’s no required down payment—often 20 percent of the purchase price—unlike with other financing vehicles.
One advantage of an equipment lease is that it comes with relatively low monthly payments. This arrangement allows you to use the equipment while also allowing you to keep cash on hand and credit card balances available for other business expenditures, unlike loans, which are generally more costly.
Another benefit to using a lease as small business equipment financing is the ease of upgrading. You can replace your equipment once the lease period ends—return the outdated equipment and lease a newer model.
It’s also best to carefully look at the lease agreement conditions to determine the fixed payment amount, the amount of payment flexibility, the lease period, and potential penalties.
Getting Equipment Financing with Bad Credit
If you want to move forward with leasing for small business equipment financing, you’ll need to know where you can secure one. Banks, bank-affiliated companies, equipment distributors, and independent leasing firms offer different financing options. However, they may not cater to your needs best.
Leasing arrangements with them often vary depending on factors like your credit history, the value of leased equipment, and the lease term.
One channel to consider is a broker like Clicklease. We provide a digital platform that connects equipment vendors and small business owners by offering micro-ticket leases, ranging from $500 to $20,000. When you need the latest equipment to ramp up production, Clicklease lets you afford it without the rigorous application process of traditional institutions. Even if your FICO score is 650 or lower, you could still qualify for the lease.
Apply online today to have the equipment you need to move forward.