Business Equipment Purchase Loans

Many businesses don’t have enough available cash to consider an outright purchase, making business equipment financing a necessity. Even if they can afford it, investing cash in assets may leave them with less working capital to finance operations or explore new growth opportunities. Using property as security for a short term loan to finance business equipment purchases can be a quick and cost effective way especially if it’s important for the business to own the asset from the outset. A loan to purchase business equipment from a private lender can be a good option for many reasons. First off, banks and traditional lenders usually have very strict lending criteria which means some businesses won’t be able to get a loan. If a business has credit issues or can’t show that they’ll be able to service the loan then the bank will likely say ‘no’, whereas a private lender has a lot more flexibility in who they will lend to. A private lender is more concerned with how the business plans to pay back the loan at the end of the term. This is called the ‘exit strategy’. If the business has a property with equity to secure the loan and a strong exit strategy then a private lender will usually consider approving the loan application. For example, a business might be looking to purchase equipment to allow them to fulfil a large customer order they have received. The exit strategy would be to use the proceeds from the order to pay back the loan. In this instance a short-term loan to purchase the equipment would allow them to take advantage of a great business opportunity.