Every entrepreneur knows that the business world moves quickly. The trend in all industries is towards a frictionless experience. However, some kinds of finance are lagging behind. The terms for traditional business loans haven’t changed in decades. In today’s fast-paced world, they’re still moving very slowly. While that may work for some people, there’s a different kind of credit that’s much more versatile and light on its feet. Equipment financing addresses and surpasses many of the drawbacks that come with a standard business loan.
With a traditional business loan, there’s lots of paperwork involved. You can expect to disclose all of your financial details. This means preparing documents like a profit and loss statement, and a cash flow statement. After completing this process, you can expect to wait up to three weeks for approval. Even establishing a credit file as a business can be labor-intensive. Just getting all the big business credit bureaus to track a business means getting a D-U-N-S number, and that process alone can take up to a month. Sometimes, a business just can’t wait that long for new equipment.
Equipment financing is a whole other ballgame. Instead of preparing a host of documents, financing requires just a simple application. Equipment financing is always secured by the equipment after it’s been purchased. That means lenders know exactly what the collateral is and where it is. They often don’t require down payments, and they don’t have to ding your personal credit report. Being able to keep cash on-hand rather than spending it on a down payment can mean everything to a small business. It can mean investing that money into other areas like research or hiring instead.
Commercial finance brokers know that equipment is literally what keeps a business running and making money. They take pride in providing a low-risk service that works well for everyone involved. Even the IRS sees the wisdom of making it easy for people to invest more in their businesses. Section 179 of the tax code makes it possible to deduct up to $1 million in financed equipment, starting the year it’s first put into use. With traditional business loans, only the interest can be deducted.