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If you own a small business and you are looking to buy new equipment, but you don’t have a lot of cash on hand you might be wondering where you can obtain a loan. There are several options to choose from such as the SBA 7(a) loan, and the credit union or bank however, there are also penalties involved if you repay the loan late. There are other options including leasing and the loan of an alternative lender. You’ll need to make a decision about whether you want to borrow money from a different source or take a loan. Your financial advisor or accountant will assist you in deciding which option is the best option for you and your company.

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SBA 7(a), loan
You could be qualified for a loan through SBA 7(a) if you are a business owner who is seeking to purchase new equipment or a business operator looking to purchase materials. Before you apply to the program, you must be familiar with the procedure.

The SBA 7(a) loan is a federal government-backed loan designed to provide financial aid to small companies. There are numerous alternatives to finance small-sized businesses. You can utilize the loan to pay for the purchase of equipment for your business, real estate and other supplies, as well as for other business-related needs.

You could be eligible for an SBA 7(a) depending on your situation in a matter of days. If you’re eligible the lender will pay your money and you can repay the loan using monthly installments. However, you’ll have to pay a prepayment of 25 percent or more of the loan’s balance within three years of the time of disbursement.

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Alternative lenders
Alternative lenders for equipment loans provide an array of alternative loan options for business owners seeking financing. They provide short- as well as long-term financing options. They are more accessible than banks, which often require extensive paperwork and a long approval process.

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They provide a variety of loan options, including invoice financing and term loans. The suitable lender for your company can aid in financing the operation and expansion of your business.

While alternative loans can be slightly more expensive than bank loans but they can assist you to grow your business while keeping your cash flow in check. Additionally, the costs can be reduced by choosing an option with a flexible rate.

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A loan for equipment will allow you to get the money you need to purchase office equipment, machinery, or vehicles. But before you begin the application process, you should consider evaluating your credit score. Companies that finance equipment won’t be able to approve you for an loan if your credit score is good.

Credit unions and banks
There are many options when it is time to finance equipment. Some companies choose to obtain an loan from a bank while others prefer to work with credit unions. No matter which lender, it’s important to consider your business’s needs when deciding on a loan.

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A loan to finance equipment can be a great method to obtain the funds you need for your business. However, you’ll need pay the loan off in time. You may end up paying more than you originally thought. That’s why it’s important to compare terms and fees.

Be sure to read the entire fine print. Although many lenders offer equipment financing loans, they each have specific application procedures. For instance, some lenders may require a large down payment. And some online lenders will impose higher interest rates than traditional banks.

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Penalties for early repayment
If you’re considering starting an enterprise or you’re looking to expand your investment in equipment making the decision to pay off your loan in advance could be a smart move. Not only will it save you money on interest, it also frees up cash to meet other requirements. The extra cash can be used to purchase new equipment or to hire new employees or to cushion your business during low seasons. It is important to be aware of the terms of your lender prior to making a commitment. Some loans come with penalties for prepayment and you should study the loan’s documents carefully.

You can reduce the interest on your equipment loan and enjoy peace of assurance by paying it off early. If you pay the loan off too early, you may have to rescind the loan terms. This could adversely impact the credit of your business. Contact your lender for more about the conditions of your loan.

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