Small Business

Equipment Leasing: What Does It Mean?

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You’re a tradeshow manager looking for equipment to help with an upcoming show or you’re looking for equipment to help with you current flourishing business, but, purchasing equipment sounds too costly. It’s until then a coworker suggests leasing equipment from numerous companies. Before you make any final decision, you decide to do extensive research on equipment leasing. What does it mean, is it expensive, and how it is more beneficial are all questions we will answer throughout the article so you don’t have to do endless hours of research.

Equipment Leasing 101

It can be a common mistake to assume leasing and borrowing are interchangeable terms under a business spectrum. One distinctive difference between these terms is the monetary compensation to the lender for leasing equipment. Generally, you pay a flat-fee rate with a fixed interest rate and fixed term. Many companies seek the leasing route compared to purchasing, especially if they only plan to use the equipment in the short-term.  Purchasing tends to be more costly and may not be worth a large payment as the equipment will continue to depreciate.

What kind of equipment can be leased? You may be imagining large tractors or machineries as equipment to be leased but equipment can be a broad term and can cover from pcs to vehicles for all types of businesses.

Pros

  • When leasing equipment, you won’t have to worry about a down payment or collateral unlike purchasing it. There is no requirement to contribute collateral so you will have the liberty to collect your cash and compensate easy payments.
  • Worrying about an application process undergoing a long strenuous time-frame is all overwhelming, but luckily, leasing equipment is an easier application process. There is fairly less financial paperwork compared to taking out a small business loan.
  • Leasing equipment offers a couple of flexible terms to choose from after the lease ends:
  1. You can purchase equipment at a fair market value and if you do, the lender will then relinquish the title to you.
  2. If your equipment has come to its last bit of usefulness, you can trade the current item to a brand new equipment piece.
  3. If none of the options above seem ideal to you, you can always choose to do the simple option, return the equipment.

Cons

After you’ve chosen to lease a piece of equipment, you begin your flat fee payments but you will also have to face an effective interest rate alongside it.

Another downside to leasing equipment is the cost of the actual equipment, especially when multiple factors are considered (credit score, annual revenue, age,etc.). There will also be a charge of equipment value and length of use for the equipment.

Need to Lease Equipment?

As we have gone over, equipment leasing provides various benefits for those who need equipment for a shorter period of time. Here at Strategic Business Loans, we offer numerous opportunities from small to big businesses to continue flourishing in their business without a financial predicament. Contact us today for equipment leasing and continue to grow your business.

Small Business Loan: Types of Loans

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In the state of California, we are known to be one of the most difficult states to flourish in businesses; most particularly small businesses. California may be one of the most recognized states of struggling small businesses but it’s also famously known for employing more citizens in the past few years. Small businesses generally fail after a few years, if not carefully planned and financed optimally. Join the rate of successful businesses in California by taking out the appropriate loan for you.

You may wonder which loans can help best serve your business without finding yourself stuck in an abundance of debt. Look no further, throughout this article we will go over SBA, or most famously known as small business administration loans, and detail how these loans can help your business.

What Is SBA? 

Before we list the types of SBA and benefits to the loan, it's crucial to understand what small business administration loan means and what it can do for you. As the name suggests, SBA is meant for small business loans carried out by the SBA and banks acting as the lender by distributing an amount to small businesses.

The lenders or banks guarantee flexible terms and interest rates so you may continue to grow your business without being perplexed with overriding debt. There are several types of loans a business can qualify with different pros and cons for each one.

Types of Loans 

Curious which loans you qualify and the benefits to them? SBA offers various loan programs for businesses to flourish in but we will cover the 3 most common loans a business can apply.

  1. 7a Loan Program: Most commonly used, the 7(a) loan guarantees a term loan of up to $5 million. This loan can be used for either working capital, to refinance debt, buy a business, real estate, or equipment financing. Since they do offer a high working capital to businesses, there are more restrictions corresponding with the loan. Luckily, they do offer a long repayment with low interest rates to make your financial responsibilities affordable.
  2. 504 Loan Program: This type of loan is generally meant for those who wish to purchase or improve fixed assets. Fixed assets may include purchasing land, machinery, facilities, etc. Instead of one lender funding these projects, this type of loan requires two lenders, either one from a bank or traditional lender. The loan itself does not cover the entire fund but, instead, covers a majority while the borrower must include collateral damage for the rest.
  3. Microloan Program: While the other two loans are backed by traditional lenders or banks, microloan is supported by non-profit organizations who lend their finances to other small businesses. These funds cover working capital, inventory, equipment, business start-up, etc. Their maximum principle is about $35,000 with a term of 6 years while interest rates range from 8%-13%.

Want More Information? 

Businesses are requiring more funds as regulations and daily operations eat a large part of their financial stake. Let us assist you in this important financial time and help you relish in success. Contact us now for more information on small business administration loans and see which best suits your needs.