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How Does Equipment Financing Work?

Equipment Financing | November 14, 2019

Understanding how equipment financing works can make it easier for you to quickly obtain, upgrade, or replace the equipment needed to perform everyday tasks without putting a substantial strain on your cash flow. At Valiant Financial, we understand how important it is to be able to obtain and maintain the best equipment for your business needs. That is why we offer a selection of financing options for a range of different industries.

What is Equipment Financing?

Equipment lease financing, like a loan, helps businesses purchase equipment by making equal payments rather than paying a lump sum for the equipment. This type of financing can be used to help purchase a wide range of equipment such as tractors, forklifts, backhoes, dump trucks, and more.

How Does Equipment Financing Work?

Equipment lease financing is designed to allow businesses to pay low monthly rental payments over a fixed term. At the end of the term you have the option to purchase the equipment free and clear, return it, or even refinance it. Choosing an end of term option can also be a great option for business owners, as it will allow you to pay lower monthly payments on the equipment.

Qualifying for an Equipment Loan

While the requirements for qualifying for an equipment loan will vary from lender to lender, most lenders will look at the following general qualifications when making a credit decision:

  • Your personal credit score—The higher the credit score you have, the better your chances of getting approved for a loan or lease and the better loan terms you can get.
  • A balance sheet and cash flow statement—To better assess the financial strength of a business, a lender may require a statement that identifies the revenue coming into the business and expenses going out.
  • Your bank statements—A lender may want to take a look at your bank statements, so having these statements prepared can help expedite the process.
  • A business plan (for new businesses)—Lenders may require you to provide a business plan that outlines the business and its annual revenue, as well as a detailed proposal for future growth.

Since equipment leasing is secured by your equipment, the risk the lender takes is generally lower than it would be for other types of lending, such as a Line of Credit. This means that the amount of information you will need to provide to get approval for equipment lease financing will be a lot less than the information required for other types of loans.

If you would like to learn more about how equipment financing works, or if you are interested in our financial services, please contact Valiant Financial at 1-833-635-3273. Our personable and friendly team members would love to help you get the equipment you need for your business to succeed.