Equipment financing vs. equipment leasing<\/h3>
Equipment leasing is an alternative to an equipment loan. A finance lease involves a lender purchasing the asset you want and then renting it out to your business for an agreed upon period. There’s usually no down payment required, and you can choose from flexible repayment terms to fit your budget. At the end of the lease, you typically have the option of returning the equipment to the lender, taking out a new lease or buying the equipment.<\/p>
So, if the equipment you need to purchase will depreciate rapidly or be outdated within a handful of years, leasing could potentially be a better option than financing.<\/p>
Not sure if equipment financing is right for your business? Learn how to understand your business financing needs<\/a> and choose the right type of loan.<\/p><\/div><\/article> You have several options to consider when searching for an equipment loan.<\/p> There are a couple options to consider if you’re applying for a loan through a bank or credit union. The first is a term loan offered under the Canada Small Business Financing Program (CSBFP). This federal government program offers loans of up to $1 million for businesses with gross annual revenue of less than $10 million. Up to $500,000 of the loan amount can be used to purchase or improve new or used equipment. Find out more in our CSBFP guide<\/a>.<\/p> The second option is a bank or credit union equipment loan that isn’t backed by the government as part of the CSBFP. You’ll generally find competitive rates, and the application process can be quite straightforward if you already have a business banking relationship with the same provider. But depending on the bank, you may need to book an appointment and visit a branch to apply for a loan.<\/p> Online business lenders offer a convenient and completely online application process. They also generally have more lenient eligibility criteria than traditional lenders. However, they may offer higher rates than banks and dealership financing.<\/p> Some lenders specialize in offering equipment loans to businesses in specific industries, such as construction, agriculture and healthcare. These companies can provide competitive rates, and you also get the benefit of dealing with a provider that has specialized knowledge about the equipment needs of businesses in your industry.<\/p> Some equipment manufacturers and dealers offer access to financing at the point of sale. These are often provided by third-party lenders, and you may be able to take advantage of special promo interest rates to lock in a competitive deal if you have excellent credit. Just be sure to compare offers from a range of other lenders as well to make sure you’re getting a good value.<\/p> If your business has bad credit or limited credit, it may still be possible to qualify for an equipment loan. This is because equipment loans are secured. With the purchased equipment used as collateral, there’s less risk for the lender if you can’t keep up with repayments.<\/p> As a result, a poor credit rating is less likely to stop your loan application from being approved. That said, you’ll still need to be able to present a strong financial case to the lender, so earning high revenue will boost your chance of approval.<\/p> Rather than traditional lenders, you may need to consider applying for equipment financing from an online lender or provider that specializes in startup loans. You should also be aware that loans for bad credit tend to come with high interest rates, and the lender may request a large down payment.<\/p> Different lenders offer competitive equipment loan rates and terms, but shopping around is crucial to finding the best value tailored to your business needs<\/p> Here are the factors to keep in mind when comparing equipment financing options:<\/p> You can apply for equipment financing in Canada by completing the following steps:<\/p> Financing equipment provides the funds you need to buy the essential items to help your business grow and remain competitive. Make sure you compare equipment loans from a range of providers before choosing the best financing option for your business.<\/p>Where can I get equipment financing?<\/h3>
Banks and credit unions<\/h4>
Online lenders<\/h4>
Specialist equipment financing companies<\/h4>
Manufacturer or dealer financing<\/h4>
Can I get equipment financing for bad credit?<\/h3>
How to compare equipment loans<\/h3>
Pros and cons of equipment financing<\/h3>
Pros<\/h4>
Cons<\/h4>
How to apply for equipment loans<\/h3>
Bottom line<\/h3>
Frequently asked questions<\/h3>
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