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Business Equipment Loan - A primer to the business equipment loan

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If you are fortunate enough to have your startup business grow to the point where you require more resources to enable you to keep up with demands from customers and clients, you may begin to feel the need to take out a special loan, a business equipment loan, to meet your newer financial obligations. At some point, most new businesses will begin to experience expenses that run above and beyond the typical expected costs of operating and developing a new company. In some cases, you may have a need for new office equipment, such as paper, pens, and staplers. In other cases, you may require lighting, or have a need for extra furniture to accommodate clients and other visitors into your offices. In specialized fields, you may need construction tools or technological equipment to play media, or medical equipment to assist in health services. Whatever specific equipment you need to meet your business goals, you may be able to obtain it through application for and approval of a business equipment loan.

A business loan is an agreement you as a borrower make with a lender where you sign an agreement to borrow a certain amount of funds to enable you to acquire an asset – in this case, equipment. An advantage of a business equipment loan is business owners and entrepreneurs seeking such loans often find it easier to finance equipment than they do to finance other aspect of businesses because the assets they seek to acquire (in this case, equipment), becomes the collateral necessary to secure the loan itself. An additional benefit of a business loan involves a low obsolescence rate of the collateral. Obsolescence refers to an object deteriorating in actual or appraised value to the point where it is no longer wanted due to its age. It is a common phenomenon in technological devices such as media players and computers; for example, video cassette recorders are increasingly considered to be obsolete as digital video recorders and digital video disk recorders become standardized methods of recording video. However, most equipment used in startup businesses, such as office equipment, will not easily become obsolete. As a result, it makes more sense to obtain a business equipment loan than it does to lease equipment, because with a business equipment loan, you will gain ownership of whichever assets you purchase once you have finished paying for them. In the case of an equipment lease, you never truly own the equipment, and it must be returned at the end of the leasing agreement.

The amount of money you obtain from a business equipment loan will vary significantly depending on a number of factors, such as the equipment you intend to finance. Common examples of equipment financed through business equipment loans include business vehicles, electronic technology, computers, hardware, tools, software, lighting fixtures, furniture, or related assets. Additional variables in the amount of money you will obtain from the loan include the cost of the equipment itself, the down payment you provide, and the history of your business. If your business has been established for a longer amount of time or if you have a high amount of projected revenue and cash flow, you are likely to be able to obtain either a higher lending amount or a more favorable interest rate than if your company has no prior history and you have just begun your enterprise.

You may be wondering at this point what the differences are between obtaining a business equipment loan and a business equipment lease, and which option is the better option for your needs. It is true that each method has its advantages and disadvantages; as a result, you should think carefully about all of the factors involved before you decide to pursue either method. Remember that if you decide to apply for a business equipment loan, you will be required to put forth a significant amount of money from the start in the form o fa down payment. This is not necessary in an equipment leasing situation, which may incline many startup business owners toward the leasing option; however, the primary drawback of leasing, as mentioned earlier, is that you will never actually own the equipment you borrow.

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