Equipment loans: Taking your business to the next level
Your business is growing, and to meet your customers’ demand, so must the tools that make your work possible. Not enough workspaces on hand? Lacking that piece of machinery that could make the difference in your ability to scale up production? Or maybe it’s a matter of replacing obsolete systems that have simply outlived their usefulness. These upgrades often find themselves on the back burner – when in fact they could mean the difference in your business’s ability to compete in a meaningful way for years to come.
What are equipment loans?
Equipment loans support the purchase of new or used business-related equipment. This solution is distinctly different from equipment leasing (where one pays the owner of the equipment for a specific amount of time). In the case of equipment leasing, one may have the opportunity for a “buyout” at the end of the term, but this option does not always exist, leaving business owners without equipment necessary to perform essential functions. In many cases, leasing equipment can also have a more significant impact on your bottom line (vs. purchasing and amortizing costs over the use of that equipment).
How are equipment loans structured?
Equipment loans allow business owners to bridge the gap of financing costly items while maintaining the cash flow necessary to keep operating costs on track. This key product allows for periodic payments that include interest and principal over a fixed term. As security for the loan, lenders often require a lien on the equipment as collateral against your debt (other structures are of course possible – such as a lien upon other business assets). Once the loan is paid in full, you own the equipment free and clear, paving the way for continued growth.
What is the advantage of securing an equipment loan?
- Tax-deductible*, allowing you to maximize your business's investment
- Flexibility in cash flow, keeping more money within your accounts in order to tend to short-term expenses (such as covering unexpected fees, freight charges, or the need to increase staffing to tend to demand)
- Better return on your investment over time versus leasing
- Highly efficient as they are reviewed and processed faster than traditional loans, putting more money back into your business, quickly
How to get started
Upgrading systems and tools can often be the key to your business’s future success. At Westfield Bank, our commercial banking team works with you to optimize your financing roadmap as your needs change, keeping you on pace to achieve your goals.