Table of Contents Hide
- What Is Equipment Financing?
- What Can Equipment Finance Be Used For?
- What Are the 4 Types of Collateral?
- Best Equipment Financing Companies 2023
- What Credit Score Do You Need for Equipment Finance?
- What Is a Good Interest Rate for an Equipment Loan?
- Equipment Financing Companies: Related Articles
- Equipment Financing Companies: References
Equipment finance is a loan that can be used to buy the equipment you need for your business. But with a wide range of equipment financing companies out there, how do you make a pick? This article will cover the best equipment financing companies in 2023 and what you should know about them.
What Is Equipment Financing?
If you own a small business and need to buy equipment of any kind, the cost can be onerous. Nevertheless, with equipment financing, you may either obtain a loan or lease the equipment through an equipment financing lender.
This allows you to get the machinery or other equipment you may need to operate, expand, or profit, without needing to pay the full cost upfront.
What Can Equipment Finance Be Used For?
Equipment financing can be used for a variety of purposes. For example, it’s an option for companies that need equipment but doesn’t have the cash to pay for it upfront. Another use is when a company doesn’t want to wait for the right time, or even never to buy equipment, and wants to get started right away with something that will help them grow faster (or at least not slow them down).
Equipment financing can also be helpful in other industries, including construction, healthcare, and manufacturing.
What Are the 4 Types of Collateral?
Collateral is the property you put up to secure a loan. There are four types of collateral:
- Real estate, which includes residential and commercial properties, as well as farms and ranches.
- Personal property, which includes cars and other vehicles; household goods such as furniture and electronics; boats; jewelry (except wedding rings); art objects like paintings or sculptures; musical instruments (including drums); musical scores for movies, tv shows, YouTube videos, etc., even if they’re not in working condition.
- Business assets such as equipment used for manufacturing products or providing services. Intangible assets include patents, copyrights, trademarks, and goodwill among others
- The most common types of collateral include your home and other real estate holdings, as well as personal property like cars, boats, and jewelry. If you’re planning to take out a loan using your home or another asset as collateral, it’s important to know what happens if you default on the loan.
Best Equipment Financing Companies 2023
The following are the top equipment financing companies you can pick from in 2023.
#1. Crest Capital
This company ranks as our overall top pick for the best equipment financing for small businesses because it offers equipment loans of up to $1 million and many of the loans are approved in just a few hours.
Crest Capital was founded in 1989 as a small- and medium-sized business lending and leasing provider, expanding across the country. This lender takes pride in saying “yes” when the bank says “no,” and it makes it simple to secure speedy approvals on the funding that businesses want the most.
We selected Crest Capital as our overall top option for the finest equipment financing because it provides such a diverse (but competitive) range of products and services. Businesses can obtain up to $1,000,000 in equipment financing through Crest, with loan repayment terms ranging from 24 to 72 months (84 months is possible on bigger loans beyond $250,000). If you’re borrowing less than $250,000, no income statements are necessary, which expedites the procedure even more.
Crest can finance both new and old equipment from a wide range of businesses. In many circumstances, businesses can finance up to 100% of their equipment expenses, including “soft charges” like delivery fees, taxes, or installation, with same-day approval.
#2. National Funding
National Finance is the finest option for financing equipment for growing enterprises. It simply requires six months of company experience and a low credit score to be approved.
No matter the industry or type of equipment required, National Financing is available to assist firms with at least six months in operation in obtaining the funding they require to expand.
National Funding provides up to $150,000 in equipment finance with loan approvals in as little as 24 hours. This lender also has no equipment restrictions. National Financing is willing to give funds for the purchase or leasing of new or used equipment.
Borrower requirements are fairly straightforward: you’ll need to have been in business for at least 6 months, have a FICO credit score of 575 or higher, and be able to provide an equipment quote from the vendor or seller.
Businesses in all 50 states and the District of Columbia can obtain financing. There is no deposit necessary. The organization is flexible in choosing the period of the loan, and everything is done on a case-by-case basis. Terms might be as short as a few months or as long as a decade.
If you have bad credit, it will be difficult to obtain a business loan, but this is especially true when purchasing equipment that might cost hundreds of thousands of dollars. The term “ecosystem” refers to a group of people who work in the construction industry. Currency is our top lender of choice.
When it comes to shopping around for the finest equipment funding for your business, credit can play a crucial factor. Not only will your credit score affect the rate you receive, but it may also limit the terms you’re offered or prevent you from being accepted by certain lenders.
Because of this, Currency is our top lender recommendation for business customers with weak credit. Customers with the majority of credit profiles are eligible for funding from the company. Expect lower funding limits and/or higher interest rates if your credit score is subprime.
Borrowers can get up to $500,000 in equipment finance through Currency. There is no down payment required, although putting money down may result in better loan conditions.
The most usual duration is five years, but six years is also feasible. There may be loan origination fees.
#4. Balboa Capital
Balboa Capital receives our highest recommendation for heavy equipment financing because to fair eligibility restrictions and same-day funding in many circumstances. They provide loans of up to $500,000 with competitive interest rates.
Heavy equipment is among the most expensive pieces of machinery that a small firm may require or purchase. It’s no surprise, then, that many businesses prefer to use equipment financing rather than pay cash when shopping for heavy machinery.
Balboa Capital is our first pick for heavy machinery finance. This lender provides equipment financing of up to $500,000 with payback lengths ranging from 24 to 60 months. The term “ecosystem” refers to a group of people who work in the construction industry.
To qualify for heavy machinery financing with Balboa, your company must have been in existence for at least a year and have an annual revenue of $100,000 or more. The company states that all credit is considered, but that they prefer a score of at least 620. This is a little perplexing.
#5. US Business Financing
Whether you want to buy new or used business equipment, or even buy from a third party, US Business Financing will finance the transaction, earning it our top ranking for used equipment.
Most equipment loans with US Business Financing are between $10,000 and $2 million. Loans as small as $5,000 and as much as $50 million are possible. If you expect to borrow $75,000 or less, you can do it with a one-page credit application and no lengthy financials. However, if you exceed $75,000, you should anticipate presenting a variety of business and financial paperwork.
Equipment financing is available for both new and used equipment. What distinguishes US Business Financing is that it also allows for the purchase of equipment from third parties, which may be useful depending on your sector and the specific equipment you’re trying to purchase.
Your company must have been in operation for at least two years in order to be eligible for the majority of financing packages offered by US Business Funding. There is, however, a program option for enterprises that are at least six months old and another for businesses that are one year old.
Read Also: NEW BUSINESS LOANS: Loans For Startups and Small Business in the UK
Credit approval takes only 60 seconds. Many applicants receive cash in as little as 24 hours, and the lender now has a 95% approval rate. Depending on the program, repayment terms can last up to 72 months. Interest rates are as low as 3.5% APR right now, but your rate will vary depending on factors such as the financing conditions you seek, the history of your business, and your credit score.
Finally, you can include 100% of the costs associated with your equipment acquisition, including “soft costs” such as installation, shipping, training, and more.
It’s worth noting that all of this lender’s offerings are for equipment leases. With that stated, there are programs where you may buy the equipment for $1 at the end of the lease if you wish to keep it ($1 Buy Out).
#6. CIT Bank
CIT Bank offers it quick and easy to secure a large equipment financing loan for your business, offering up to $500,000 with a quick online application (and up to $1 million with financials).
It also provides small enterprises with equipment loans of up to $1 million with payback lengths ranging from six to 72 months. With a simple application-only loan, you can borrow up to $500,000 without needing to submit any more information. You can borrow up to $1 million if you’re ready to compile and send over financials. Do you require additional funds? CIT’s Capital Equipment Financing program provides up to $100 million (and more in some situations) in financing with repayment terms of up to ten years.
The online application for CIT Bank takes about three minutes to complete and submit, and funding can be received in as little as one business day. Financing is available for both new and used equipment, with rates as low as 5.49% APR.
You will be required to provide a lengthy business history. The term “ecosystem” refers to a group of people who work in the construction industry. Additionally, same-day financing is not accessible, although authorized cash might be in your account as soon as the following day.
Financing possibilities are also fairly flexible. Depending on what works best for you and your business, you can pick between monthly, seasonal, and deferred repayment options. The term “ecosystem” refers to a group of people who work in the construction industry. CIT Bank also offers a $1 Buyout option (EFA). With a fair market value lease, you have the choice to purchase your equipment at the end of the term or simply return it, and CIT also accepts net 30-, 60-, or 90-day payments.
What Credit Score Do You Need for Equipment Finance?
To get approved for a loan, you need a credit score of 600 or better. This is the minimum required by most equipment finance companies to qualify for financing on your purchase. You may be surprised to learn that it’s not just the amount of money you make each month that affects your overall credit score; other factors like how much debt you have and where you live also contribute. Your credit report contains information about all three factors: wages, income, and debt payment history.
To get approved for an equipment finance loan from a reputable lender such as [company name], there must be enough equity in your home (or other property) so that they can use it as collateral against their investment—in this case, yours!
If there isn’t enough equity built up by paying off existing debts first, then it would be difficult for them even if everything else checked out perfectly well except perhaps not having enough savings set aside beforehand.
What Is a Good Interest Rate for an Equipment Loan?
Good interest rates are typically around 5%. If you have a good credit score and can provide proof of your income, the interest rate will be higher. Interest rates are lower if you have a bad credit score or no history of paying bills on time.
For example, if someone takes out an $80,000 loan to buy equipment for their business at 4% interest over 24 months with no other factors affecting their ability to make payments (no payments late or missed), then they will pay $961 in total over those four years, or $812/monthly.
This is still fairly high compared with many other types of loans, but not as high as our previous example where we calculated that it was going to cost them $1,737 per month.
It’s important to remember that equipment finance is not the same as a bank loan. It is used for specific purposes and comes with its own set of terms and conditions. You should always be aware of these when seeking out the right service provider for your needs.
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