We Answer Your Equipment Financing FAQs

By Beacon Funding| Aug 10, 2022| 2693 Views
We Answer Your Equipment Financing FAQs

Every year, thousands of business owners ask us to help them acquire equipment they need for their business. Our financing experts provide best practices, recommendations, and financing plans tailored for their business needs.

We noticed certain equipment financing questions that needs answers. So, we consolidated our common questions to help clear any doubts you may have with regards to financing your next equipment purchase.

Get Answers to These Frequently Asked Questions…

  1. Why do I have to pay sales tax for some leases but not others?
  2. What is a pre-approval, why do I need one, and how long is it good for?
  3. How can I get cash for my business using equipment financing?
  4. How can I decrease my total repayable on my next lease/loan?
  5. Can I leverage my existing equipment when financing a new purchase?
  6. How can I get cash fast without risking my personal credit?

Why Do I Have to Pay Sales Tax for Some Leases but Not Others?

Depending on which state you do business in, sales tax will be your responsibility to pay upfront or as part of your monthly payments. Tax treatment is determined by the type of equipment you are purchasing, the type of contract you are signing, and how you’ll use the equipment.

Let’s Break Down How Sales Tax Works

It is specific to each state. Some states require you to pay your sales tax upfront, some don’t require you to pay it at all. It is important to understand how your state operates with regards to sales tax.

Can work within your business goals. When discussing your business goals with your consultant ahead of time, they can help construct a plan that works for you:

  • Minimize Your Initial Costs: In most cases you have the option to add the sales tax to your monthly payment. Pay off your tax responsibility throughout the course of the loan instead of upfront. Depending on your state’s sales tax, this could defer a large sum!
  • Sales Tax Due Upfront: Paying sales tax upfront could potentially be less expensive than paying over the course of your loan. If your business has ample cash, this could be a great option.

If you’re trying to understand what best works for your business, have a quick chat with our friendly financing consultants.

What Is a Pre-approval, Why Do I Need One, and How Long Is It Good For?

In today’s competitive market with inflated operational prices and scarcity of equipment, timing is everything. The longer you wait for the cash you need, the greater the chances of you losing out on the equipment to another buyer.

To be ready to jump on the next equipment buying opportunity, get pre-approved.

A pre-approval is a no-cost, no-commitment way for you to finance the equipment you will need in the future. When you apply for a pre-approval, Beacon will give you a monthly payment estimate, maximum lease amount, end-of-term options, and other details to help better understand what you're getting into off the bat. Not to mention a pre-approval is good for 45 days post-approval.

You could be pre-approved within 24 hours! Learn more about the process and your options here.

How Can I Get Cash for My Business Using Equipment Financing?

With equipment financing, you have the option to leverage your equipment’s value in exchange for cash. Get the cash influx you need straight into your business with a sale-leaseback.

A sale leaseback is as simple as selling the equipment you own to a lender and allowing them to lease it back to you over an agreed period. Your business receives the cash from the sale almost instantly, which you can then use for a variety of business needs.

  • Improve Cash Flow
  • Lower Finance Cost
  • Keep Generating Cost
  • Keep Generating Profit
  • Improve Your Balance Sheet

Plus, you get to keep the equipment in your possession, allowing you to keep generating revenue with it. Best of all, you then reclaim ownership at the end of the lease term.

How Can I Decrease My Total Repayable on My Next Lease/Loan?

Don’t be shy about communicating these priorities to your financing consultant.

Knowing your business goals and financing needs are key to securing the right funding. This helps assure they recommend creative financing solutions for your business.

Most lenders also go by different factors that affect the cost of a customer’s funds which include paraments like their time in business, personal credit, etc.

Find a broader list of factors here.

Getting a lower repayable begins by having a strong application. If your goal is to decrease your repayable, talk to your representative before financing.

Finally, having the right lender during this long-term partnership is always the tipping point between businesses that pass by and businesses that thrive.

Talk to our financing consultants to assess your options for a plan that budget friendly for the long term.

Can I Leverage My Existing Equipment When Financing a New Purchase?

Absolutely! You can always leverage collateral against your financing.  Adding an additional collateral to your credit package can only serve to strengthen your overall profile. You can leverage an additional collateral to decrease financing charges or even lower a down payment requirement as the value of the pledged assets helps decrease risk.

If you’re looking to modify and lower your lease cost, consider adding an additional collateral to help the lender mitigate any risk. This can help smaller/ younger businesses strengthen their credit profile ensure they get the best deal possible.

How Can I Get Cash Fast without Risking My Personal Credit?

Your best bet would be to utilize a working capital loan when you want to get funding for your next opportunity.

A working capital loan helps you get the cash you need when you need it (even without the addition of equipment).

There is key difference between a standard bank loan and a working capital loan. In a traditional bank loan, it takes time to get approved and receive funds in your hands. With working capital, you can receive funds in your account on the same day you apply!

Have Any Other Questions?

Let’s connect! These answers might help give you a bit of clarity but it’s just the first step. If you have question that need to be answered, then write to us an email at [email protected]. We will get back to you as soon as possible with answers and resources you can use to help your business.

Looking for something even quicker? Let’s get on a quick call. Schedule a time to chat here.

Beacon Funding
Beacon Funding

P: 847.897.2499 |  EContact Me

Since 1990, small businesses nationwide have been able to grow with fast affordable equipment financing from Beacon Funding.