Are you ready to supercharge your business growth? As an ambitious entrepreneur, you know that having the right equipment can make all the difference. Whether you’re dreaming of a sleek embroidery machine or eyeing a skid steer for your landscaping venture, equipment financing is your ticket success.
But where do you start? A Google search for “how to qualify for equipment financing” will provide you good resources on what you need before applying, but what should you do before locking into an agreement?
In this article, we’ll guide you through the ins and outs of equipment financing. Forget the jargon – this is your practical roadmap to avoiding pitfalls and seizing opportunities.
Common mistakes of financing equipment in 2024…
- Not knowing all your options
- Not knowing your lender
- Unrealistic expectations
- Using rate tunnel-vision
- Not balancing cost and cash flow
- Not insisting on getting it in writing
- Not determining what you can comfortably afford
1. Not knowing all your options
With banks approving only 30% of their financing applications, are they really your best bet? A common mistake is not evaluating which lender will give you the best approval.
Equipment financing can come from several sources including finance companies, credit unions and captive financing. But with an AAA+ rated specialized equipment financing lender, like Beacon Funding, can increase your chances of getting funding. We approve 70% of businesses. We like those odds, don’t you?
2. Not knowing your lender
Don’t apply for equipment financing without researching the lender. If you are not familiar with a potential lender, here are great ways to evaluate their reputation:
Review their customer testimonials: 81% of consumers rely on Google and Better Business Bureau reviews to evaluate local businesses.
Ask your equipment vendor: They can recommend a trustworthy lender who can offer the best for financing specials for your business.
Experience: Specifically with the equipment you would like to finance. When you work with a lender who understands your specific equipment needs and business requirements you might be able to get more flexible terms that suit your business cycle.
3. Unrealistic expectations
Understanding how your credit quality impacts your monthly payment allows you to set realistic expectations. The lower your credit risk, the lower your financing cost and vice versa.
4. Using rate tunnel-vision
Focus on the affordability, profitability, and overall cost of the deal, rather than just the rate. If you have a low rate but a longer term, you may end up paying more than a higher rate over a shorter term.
5. Not balancing cost and cash flow
Selecting a term that is too short saves money but at a great sacrifice to your cash flow. Work with your lender to determine a payment that will leave you with the most cash on hand.
6. Not insisting on getting it in writing
Don’t cut corners. Avoid a lender based on a “verbal” quote and get everything printed instead.
Get your financing agreement in writing so it’s clear how much you pay and when it’s due each month.
7. Not determining what you can comfortably afford
Consider how much money you can put down and still have enough on hand for emergencies. A breakeven calculator can also help you determine the minimum jobs you need to complete to cover your monthly payment.
A breakeven estimate is a powerful tool for helping determine your monthly budget. Know how many jobs your business needs to fulfill to break even on your equipment investment. This way, you can rest assured how to price your services and build your client base to make a solid profit each month.
Take The Next Step: Explore Financing Options
Ready to finance your equipment? Click below to explore your options!
Whether you want to finance a tow truck or an industrial screen printer for your startup, understanding the common mistakes to avoid is crucial. Remember to diversify your search beyond traditional banks – explore an A+ rated lender like Beacon Funding.
Ready to take the next step? Explore your financing options now!
EXPLORE FINANCING OPTIONS