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You might be wondering how to borrow money if you are a small business that needs to purchase new equipment. There are several choices to choose from, like the SBA 7(a) loan and the credit union or bank but there are some penalties if you pay back the loan early. In addition, there are other options to consider including leasing and the loan of an alternative lender. The decision on whether you should get a loan or borrow from another source is a personal choice, so you should consult your accountant or financial advisor to determine what’s best for your business.

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SBA 7(a), loan
If you’re a proprietor of a business seeking to purchase new equipment, or a business owner looking to acquire materials for your operation you may be eligible to obtain a loan via the SBA 7(a) loan program. Before applying it is essential to be aware of the process.

The SBA 7(a) loan is a federal government-backed loan that was designed for financial assistance to small companies. There are numerous ways to finance small businesses. You can use the loan to fund the purchase of real estate, business equipment and other supplies, as well as for other business-related needs.

You could be eligible to apply for an SBA 7(a) according to your specific circumstances within a matter of days. If you’re eligible the lender will release the money and you are able to pay back the loan through monthly installments. But, you’ll need to prepay 25 percent or more of the loan’s balance within three years after disbursement.

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Alternative lenders
Alternative lenders for equipment loans provide numerous alternative loan options for business owners who are looking for financing. These lenders can provide short- and long-term funding options, and are easier to access than banks. Banks usually require lengthy paperwork and long approval processes.

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They also offer various loan products which range from term loans to invoice financing. Finding the appropriate lender for your company can aid in financing your business’s growth and operations.

Although alternative loans are more costly than bank loans however, they can be used to increase your business’s profitability and keep your cash flow in control. It is also possible to reduce charges by choosing flexible rates.

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A loan for equipment can help you get the cash you need for office equipment, machinery, and vehicles. Before you begin the application process, you should take a moment to evaluate your personal credit. Companies that finance equipment won’t be able to approve you for a loan if your credit score is high.

Banks and credit unions
There are many options available when it is financing equipment. Some companies opt for loans from banks while others opt for a credit union. Whatever the lender, you’ll want to think about your business’s needs when selecting the right loan.

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A loan to finance equipment is a fantastic way for you to access the funds that you require to run your business. However, you’ll need to pay the loan off in time. If you don’t, you may discover that you’re paying more in interest than you thought. It’s crucial to compare charges and terms.

It is crucial to read the entire agreement. While many lenders offer equipment financing loans they each have their own application processes. For example, some lenders might require a substantial down payment. Online lenders could have higher interest rates than traditional banks.

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Penalties for early repayment
If you’re planning to start an enterprise or you’re looking to boost your investment in equipment paying the loan off early can be a smart move. Not only can it save you money on interest, but it also frees up cash to meet other requirements. You can make use of the extra funds to acquire new equipment, or hire new employees, or as a cushion in times of low demand. However, it is essential to look over the terms of your lender prior to making a commitment. Prepayment penalties may be applicable to certain loans so make sure you carefully review the loan contract.

Paying off an equipment loan early can help reduce the amount of interest due and provide peace of mind. If you pay it off too soon it could be necessary to change the terms of your loan. This could negatively impact your credit rating for your business. If you’re thinking of resetting your loan, contact your lender and inquire about the terms of their loan.

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