Whether you are starting a new business, or your existing material handling equipment breaks down and can’t be fixed, chances are you won’t have the money to buy the equipment outright, and you will need to look into equipment. Equipment Loans Online is one of the best companies that can help you with equipment financing loans.
There are several types of material handling equipment Equipment Financing you can get a loan for, including:
- Hand trucks
- Side loaders
- Pallet tucks
- Order pickers
- Forklifts
- Stacking frames
- Drawers, bins, and shelves
Material handling equipment is essential for work efficiency, lower costs, better use of warehouse space, reduced waste, and increased employee safety.
Because this equipment is essential for your employees to do their work quickly and efficiently, you should know how to prepare to apply for equipment loans online.
Common Reasons Business Owners Apply For Equipment Loans and the Benefits
There are several reasons business owners apply for equipment loans online, and your business could fall into one of these categories.
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#1 You Need New Equipment financing
This is the most common reason people apply for equipment loans. If something can make your business more productive, such as a forklift to make carrying heavy loads simple or new computers to make employees more efficient, an equipment loan can help purchase these or any other items that will help streamline business activities.
#2 You Need An Equipment Upgrade
If your existing equipment is old or outdated, replacing the equipment is essential for your business to succeed. The more effective the equipment functions, the more it will help you meet customer demands and compete with the competition.
#3 The Equipment Needs Frequent Repairs or Cannot Be Repaired
If your material handling equipment breaks down and cannot be repaired, you will need a business loan right away to replace the equipment to keep the business running.
If the equipment breaks down frequently, it will likely be cheaper to get a loan to purchase new equipment rather than continuing to pay for repairs on older equipment that may not last much longer.
#4 Tax Breaks
When you purchase new equipment for your business, you can write it off as a business expense, and the purchase is eligible for the section 179 deduction. You can write off the entire cost of the equipment the year you buy it, up to $500,000. This is better than depreciating it slowly over time. This will allow you to write off the entire cost of the equipment while lowering your taxable income and tax liability. Best of all, you can stay on budget by paying the equipment off over time.
#5 A Loan Is Better Than Leasing
Getting a loan is better than leasing the equipment. When you get into a lease, you will have to make regular payments and return the equipment when the lease is up. In addition, you will have to pay for any damage the equipment sustained while in your possession. You do have the opportunity to purchase the equipment at the end of the lease, but you have to pay without the help of a loan.
An equipment loan makes the equipment yours from the time the loan is approved, and you won’t have to worry about what you will do when the lease expires.
Tip 1: Check Your Credit Score
The first thing you should do is check free credit score online to ensure you qualify for the loan and get a reasonable interest rate. Most lenders won’t approve a loan for an online or small business unless they are sure there is no risk and typically only approve loans for people with good credit.
All potential lenders will want to see your business credit history. In addition, they will look at your personal credit history. Getting an equipment loan can be challenging if you have defaulted on a student loan or have extensive credit card debt or missed payments. If you are approved for a loan, your bad credit will make it impossible to get a good interest rate, and you will end up paying thousands of dollars more for interest throughout the life of the loan.
You should get a credit report from the major credit bureaus to ensure there are no errors on your credit report. Also, paying down some of your debt can help.
When applying for equipment loans, your credit should be in good shape to ensure the best results.
Tip 2: Have a Solid Business Plan
Most lenders will ask to see your business plan because they can use it as a road map of your future success. If the lenders see you have a solid plan and it’s working, you will have a better chance of being approved for a loan.
When creating the business plan, you should include the following:
- Identify your business as clearly as possible.
- Describe the product or services you provide.
- Detail your current cash flow.
- Show aggressive and realistic goals for the future growth of the business.
- Identify the demographics of your primary market and explain how your business fulfills a need within this market.
- Summarize your entire business plan in a few paragraphs and label it the “Executive Summary.
When you have a solid, professional plan in place, the lender will see you are serious about your business. The information you provide can help increase your chances of being approved for a low-interest loan.
Tip 3: Update Your Resume
Although you aren’t applying for a job, you should still update your current resume. Most lenders feel a resume can help them see the person behind the business and can help them see how qualified you are to run the business based on your past jobs.
You are the person who will be responsible for repaying the loan; therefore, the lenders want to ensure you are a good credit risk, and your personal resume can help.
#4 Get Your Finances In Order- Equipment Financing
If you are going to be approved for an equipment financing loan online. Lenders will want to see the money coming in and the money going out. It’s a good idea to hire an accountant to go over your business and personal financial records to ensure everything is in order. This information will give lenders an idea of how your business is doing in real-time, and having an accountant go over the books will ensure they’re accurate and ethical.
If your business relies on material handling equipment that you don’t have or has broken down, an equipment loan could be the solution to your problems. As long as you have at least 20 percent of the total cost of the equipment to use as a down payment and your business and personal finances are in order, you have an excellent chance of being approved for an equipment loan.
