4 Things You Should Know About Your Equipment Term Loan
August 9, 2017
Equipment purchases are a vital part of starting (and running) a small business in Maryland. Equipment updates and modernizing old equipment can make your business more productive, efficient and even save you money in the long run.
However, purchasing equipment is not an insignificant investment. While there are many ways to finance business costs, many business owners turn to equipment term loans for acquiring or updating new machinery and equipment.
What Is an Equipment Term Loan?
An equipment term loan is essentially a business loan that offers either a fixed or floating interest rate for a pre-specified term (generally three – seven years).
Getting Started with Equipment Term Loans – Things to Consider:
- Collateral: Banks can lend anywhere from 80 to 100 percent of the financing for the equipment purchase. In some cases, you might need additional collateral for your loan, depending on the amount of money you’ll need and your financial situation.
- Time of Loan: The average term loan for business equipment is three to seven years. The term will generally match the useful life of the equipment which largely depends on the type of equipment being purchased. You can work with your bank to find a term that works for you.
- Approval Time: Depending on the bank you’re working with, or how quickly you produce the necessary financial information, you should be able to get approval for your equipment term loan within a reasonable amount of time. Be prepared for the process to take a few weeks.
- Credit Worthiness: You’ll need to prove your credit worthiness. Business term loans, especially ones for high ticket purchases like manufacturing equipment, have a very thorough loan approval process. Be prepared to have your personal and business credit reviewed. The bank will want to make sure that you’re in a good financial position to be able to take on payments for the duration of your loan.
When you’re looking for business equipment financing, make sure you find a bank that is willing to work with your company to find a solution that’s right for you. Ensure you are prepared for the amount of information you may need to provide (collateral, credit history, etc.) and the time it may take to process a business equipment loan.
For more information on how Revere can help your business with equipment financing, call 866-950-5784 or (301) 841-9600.