It’s hard to run a business if you lack the basic equipment. Often, a business is unable to function without the right tools, and getting that equipment is one of the big barriers to a successful launch. Even if certain equipment items aren’t 100% necessary, many should be prioritized because they can make running your business much easier. From vital necessities to those tools and resources that can improve efficiency, productivity, and team morale, you will face issues if you lack the finances to buy or rent the equipment that you need. If there are essential pieces of equipment that you need, but you don’t have the financial backing to be able to afford them, here’s how you can make financing that equipment much easier.
Step One: Clean Up Your Credit History
If you’re looking at equipment financing or a small business loan, then you’re going to need to make sure that your credit score is at a healthy level. Lenders are going to be reluctant to lend you the money you need if your history of financial mismanagement is reflected in your credit score. However, even if your credit history is weak, there are still lenders who specialize in providing finances. Ideally, before you take out any kind of funding, you should take steps to improve your credit score. Get a credit report and check for errors. Then go through every section of your report and start identifying the best way to get your credit score looking more positive.
Step Two: Know Your Needs
Have a detailed and thorough list of every price of equipment that you need. Then go through each item and do your research. You can find that even the most expensive equipment can be purchased for lower prices if you avoid brand names or opt for second-hand purchases. When lenders are funding your equipment purchases, they will often look at its potential lifespan. They want to be more certain that you will be able to pay back what you owe before the equipment becomes out of date or broken. The more that you know about your equipment needs and options, the stronger you’ll be able to make your funding application.
Step Three: Understand Your Options
While some banks still approve small business loans for equipment, they are no longer your only option. Banks are becoming much more hesitant to lend money to small businesses, and the interest rates can often be prohibitive, especially for first-time entrepreneurs. There are alternative solutions. Before you book an appointment with your bank manager, consider:
- Other Lenders: It’s not just banks that lend money to businesses. If you need equipment that you can’t afford, then those lenders can make it much easier to launch your business. Look at established and reputable lenders like biz2credit, which make it easy to apply and will give you a fast turnaround time on approval.
- Equipment Leasing: This is an alternative that doesn’t require you to pay the full price of the equipment that you need. Instead, you are essentially paying to rent the equipment, and paying an ongoing set price until the equipment is either no longer needed or no longer functions. This can be a more costly approach, but you do get the option to buy the equipment outright at the end of the agreement.
Money is always going to be a limiting factor for a business. If you lack the bottom line to pay for the equipment you need to run your venture, then you may not be able to trade at all. Learn more about your options and your future will be much more secure.