If you run an entrepreneur-sized business and want to buy some new equipment, but you do not have a lot of cash on hand you might be wondering what you can do to get a loan. There are many options to choose from, including the SBA 7(a), bank or credit union loan. However, there are penalties if you repay the loan early. There are alternatives, like leasing or borrowing from another lender. You will need to decide whether you want to borrow money from a different source or take a loan. Your accountant or financial advisor can help you decide what is best for your business and you.
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SBA 7(a) loan
You may be qualified for a loan via SBA 7(a) if you are an owner of a company seeking to purchase new equipment or a business manager seeking to purchase equipment or other materials. Before you apply, 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. There are many alternatives to finance small-sized companies. The loan can be used to finance the purchase of equipment or real estate, as well as supplies and other business needs.
Depending on the circumstances, you might be able to be approved for an SBA 7(a) loan in just a few days. If you’re eligible the lender will then disburse the money and you are able to pay back the loan through monthly installments. You will need to prepay 25 percent or more of the amount due within three years.
Alternative lenders
Alternative lenders offering equipment loans have various lending options for business owners looking for financing. They offer short- and long-term funding options and are more accessible than banks, which usually require extensive paperwork and a long approval process.
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These lenders also offer various loan options which range from term loans to invoice financing. The best lender for your business can help you finance the business and growth of your company.
Although alternative loans are more costly than bank loans but they can be utilized to grow your business and keep your cash flow in control. In addition, the cost can be cut by selecting a flexible rate option.
An equipment loan can give you the money you need to purchase office equipment, machinery, or vehicles. Before you begin the application process, make sure to assess your personal credit. Some companies that finance equipment will only allow you to get an loan if you have stellar personal credit.
Banks and credit unions
There are a myriad of options when it comes to financing equipment. Some companies opt to obtain loans from banks while others prefer working with a credit union. Whatever lender you select, it is crucial to take into consideration your company’s needs when choosing a loan.
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A loan for equipment financing can help you to get the money that you need for your company. But, you’ll have to repay the loan in time. If you don’t, you could find yourself paying a lot more interest than you thought. It is important to compare rates and terms.
It is also important to read the entire fine print. While many lenders offer equipment financing loans, they each have their own procedures for applying. Some lenders may require a substantial downpayment. And some online lenders will have higher interest rates than traditional banks.
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Penalties for repaying early
If you’re considering starting an enterprise or you’re looking to expand your investment in equipment making the decision to pay the loan off early can be a smart move. Not only does it save you money on the interest, it also frees up cash flow to cover other requirements. You can make use of the extra funds to purchase new equipment, hire new employees or as a cushion during times of slowness. However, it is essential to look over the terms of your lender prior making an agreement. Some loans have penalties for prepayment, so be sure to go over the loan documents carefully.
Making the decision to pay off your equipment loan early can reduce the amount of interest you have to pay and give you peace of mind. However, if your plan is to pay it off before the due date, you will also have to reset your loan’s terms. This can adversely impact your business’s credit. If you’re interested in resetting the terms of your loan, contact your lender and ask about the terms of their loan.
