Small businesses often require equipment to run their operations effectively, and acquiring that equipment can be costly. That’s where equipment loans come in. Equipment loans are a type of financing used to purchase or lease equipment necessary for running a business. In this post, we’ll take a closer look at the top five small business equipment loans to consider in 2021.
1. SBA 7(a) Loans
The Small Business Administration (SBA) offers various loan programs, one of which is the SBA 7(a) loan. This loan is designed for small businesses looking to purchase or lease equipment. The maximum loan amount is $5 million, and the repayment term can be as long as 25 years. It’s worth noting that these loans require collateral and a personal guarantee from the business owner.
2. Equipment Financing from Online Lenders
Online lenders such as BlueVine, Fundbox, and Kabbage offer equipment financing for small businesses. This type of loan is ideal for businesses that need a quick and easy funding solution. Online lenders typically don’t require collateral, and the application process is quick and straightforward. However, interest rates can be higher than traditional bank loans.
3. Traditional Bank Loans
Traditional bank loans remain a popular option for small businesses seeking equipment financing. Banks offer long-term financing options with competitive interest rates and flexible repayment terms. However, the application process can be time-consuming, and collateral is often required.
4. Equipment Leasing
Equipment leasing is a popular option for small businesses that need equipment but don’t want to purchase it outright. Leasing allows businesses to use equipment for a set period, typically between two to five years, in exchange for regular payments. The advantage of leasing is that it requires less upfront cash than buying equipment outright.
5. Business Line of Credit
A business line of credit is a type of revolving credit that allows a business to borrow funds as needed. This type of funding can be used to purchase or lease equipment. Businesses only pay interest on the amount borrowed, making it a flexible financing option. However, interest rates can be higher than traditional bank loans.
In conclusion, there are many options available to small businesses seeking equipment financing. When considering a loan, it’s essential to evaluate the business’s needs and financial situation carefully. Choosing the right equipment loan can help a small business grow and succeed.
