If you run an entrepreneur-sized business and would like to purchase some new equipment, but don’t have much cash on hand you might be wondering what you can do to get a loan. There are a variety of options available for you, including the SBA 7(a), bank or credit union loan. However, there are penalties if you repay the loan early. There are other alternatives available like leasing or borrowing from an alternative lender. The decision as to whether to take out a loan or borrow funds from a different source is a personal one, so you should consult your financial advisor or accountant to determine what’s best for your business.
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SBA 7(a), loan
If you’re a company owner looking to buy new equipment, or you’re an owner of a business looking to purchase materials for your business you might be able to borrow money through the SBA 7(a) loan program. Before applying, it is important to be aware of the process.
The SBA 7(a) federally-backed loan, is designed to offer financial assistance for small-sized companies. It provides a variety of financing options for different small-scale business needs. You can utilize the loan to finance the purchase of business equipment, real estate or supplies, as well as other reasons for business.
You could qualify to apply for an SBA 7(a), depending on your situation and in just a few days. If you are eligible the lender will consider your application and make monthly installments. However, you’ll have to pay 25 percent or more of the loan’s balance within three years of disbursement.
Alternative lenders who offer equipment loans provide an array of alternative financing options for business owners who are looking for financing. These lenders offer short as well as long-term financing options. They are more accessible than banks, who typically require lengthy paperwork and an approval process.
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These lenders also provide various loan options ranging from term loans to invoice financing. The suitable lender for your company can help you finance the business and growth of your business.
While alternative loans may be a bit more costly than bank loans but they can assist you to expand your business while keeping your cash flow in check. In addition, the cost can be cut by selecting the flexible rate option.
A loan for equipment can help you get the money you need to purchase office equipment, machinery, or vehicles. Before you begin the application process, make sure you check your credit rating. Some financing companies for equipment will only grant you loans when you have a stellar personal credit.
Banks and credit unions
When you need to finance equipment, there are a lot of options. Some businesses opt for loans from banks while others prefer a credit union. Whatever the lender, you’ll want to think about your business’s needs when choosing the right loan.
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An equipment financing loan can be a great option to raise the money you require for your business. However, you’ll need to repay the loan on time. If you don’t do this, you’ll discover that you’re paying more interest than you initially anticipated. It’s the reason it’s so important to evaluate fees and terms.
You should also be sure to read the fine print. Although several lenders offer equipment finance loans, they each have specific application procedures. Some lenders might require a large downpayment. Additionally, some online lenders may charge higher interest rates than a traditional bank.
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Penalties for early repayment
The option of paying off your loan earlier is a wise choice, whether you are looking to start a new business or increase your investment in equipment. It will not only save you money on interest costs, but also allows you to have more cash flow to be used for other reasons. The extra cash can be used to buy new equipment or hire new employees or to cushion the impact of periods of low demand. Before you make a commitment to a loan, you must study the terms and conditions of the lender. Prepayment penalties may apply to certain loans, so be sure to review the loan contract.
You can cut down on the interest on your equipment loan and get peace of assurance by paying it off early. If you decide to pay it off earlier, you will also be setting your loan’s terms. This can negatively impact your business’s credit. Contact your lender for more about the conditions of your loan.
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