Understanding how equipment financing works can make it easier for you to quickly obtain, upgrade, or replace the equipment needed to perform everyday tasks without putting a substantial strain on your cash flow. At Valiant Financial, they understand how important it is to be able to obtain and maintain the best equipment for your business needs. That is why they offer a selection of financing options for a range of different industries.
What is Equipment Financing?
Equipment financing is essentially a type of loan that works to help businesses purchase equipment by making payments rather than having to pay a lump sum for the equipment. This type of loan can be used to help purchase a wide range of equipment such as tractors, forklifts, backhoes, dump trucks, and more.
How Does Equipment Financing Work?
Equipment financing is designed to allow businesses to pay periodic payments that include interest and principal over a fixed term. In most cases, a lender will require businesses to provide some sort of security to ensure that the loan will be paid in full, such as putting up the equipment as collateral. Once the cost of the equipment and interest has been covered by the recurring payments, the business will own the equipment free and clear; however, if the loan is not paid back in full, whatever has been put up as collateral can be repossessed by the lender.
Qualifying for an Equipment Loan
While the requirements for qualifying for an equipment loan will vary from lender to lender, most lenders will look at the following general qualifications when making a credit decision:
- Your personal credit score—The higher the credit score you have, the better your chances of getting approved for a loan and the better loan terms you can get.
- A business plan—Lenders may require you to provide a business plan that outlines the business and its annual revenue, as well as a detailed proposal for future growth.
- A balance sheet or cash flow statement—To better assess the financial strength of a business, a lender may require a statement that identifies the revenue coming into the business and expenses going out.
- Your personal financial statements—A lender may want to take a look at your personal financial statements, so having these statements prepared can help expedite the process.
If you would like to learn more about how equipment financing works, or if you are interested in their financial services, please contact Valiant Financial at 1-833-635-3273. Their personable and friendly team members would love to help you get the equipment you need for your business to succeed.