When you own a business, you’ll likely need certain equipment to be successful. Computers, furniture, fixtures, machinery, electronic devices, and office equipment are some examples of equipment you may need while operating your business. Problem is, it can be quite difficult to afford using your own capital. Thankfully when businesses in Canada require funding for equipment, they have a variety of financing options available including, debt financing, leasing, equity, trade credit, and government financing.
Should You Get a Business Loan For Your Equipment?
No matter what type of business you operate, quality on-site equipment can be pretty expensive. Let’s say you’re trying to furnish your own restaurant, bar, or coffee shop. While you may be able to cover some expenses by yourself, most kitchen equipment (fridges, beverage dispensers, ovens, etc.) can certainly cost a pretty penny. And let’s not forget just how expensive manufacturing equipment can be. This is where a business loan can open so many doors for you and your company. With a business loan, you’ll be able to purchase the equipment you need to take boost your profit and sales.
How You Can Use Your Business Equipment Loan
When you’re a business owner, there are plenty of areas you can use your financing, including purchasing the right equipment to get the job done. Here are just some types of business equipment you can finance with a good business loan:
Medical and Dental Equipment
- Medical equipment for clinics, practices, hospitals.
- Dental equipment such as examination chairs/tables/lights, x-ray machines, and lab equipment.
- You can purchase professional photography equipment for your studio or freelance business such as cameras, tripods, lighting, backdrops, photo printers and more.
- Landscaping companies can purchase lawn and garden care equipment such as riding mowers, electric or gas-powered hedge trimmers, and leaf blowers.
- Farmers can finance farming equipment such as tractors, ploughs, irrigation systems, balers and other agricultural equipment.
Construction and Warehouse Equipment
- Construction companies, contractors and roofers can purchase basic construction equipment such as power tools, ladders, and scaffolding. They can also purchase any safety equipment required like hardhats/helmets, steel-toed boots and protective goggles.
- Owners running a warehouse can use a business equipment loan to purchase forklifts, assembly lines, shelving units, pallet jacks and other warehouse equipment.
- In order to run high-quality office equipment (computers, photocopiers, fax machines, printers, desks, etc.)
Auto Repair Equipment
- Other equipment you can purchase with an equipment business loan is mechanical equipment for auto repair or body shops such as
- Vehicle hoists
- Pipe benders
- Air tools
- Air compressor
- Pedestal drills
- Tire changer and wheel balancer
- Car jack
- Transmission repair equipment
- Frame machine
Plumbing and Sewer Equipment
- When running a plumbing business you’ll need plumbing and sewer equipment to do the job. With a business loan you can load your arsenal with air compressors, gas metres, water pumps, sewer cameras, lateral liners, drainage machines and other tools.
Best Business Loan Providers For Equipment Financing
Business Loans For Equipment v.s. Equipment Loans
In addition to business loans, entrepreneurs and business owners can use equipment loans to finance their equipment. While both options provide the same solution, they work very differently.
Business Loans For Equipment
A business loan is a form of financing where you receive a lump sum of cash that you must repay with interest within a specified amount of time. Repayments are usually made bi-weekly or monthly. Business loans are extremely versatile and can be used to not only purchase equipment but it can be used to pay suppliers, improve cash flow, cover rent and more. Moreover, a business loan can come in two forms:
- Secured: A secured business loan is backed by a business asset (i.e. real estate, vehicles, accounts receivable, inventory, etc) or a personal guarantee. This provides the lender security in the event you default on your loan.
- Unsecured: An unsecured business loan is basically just a business loan where you provide no collateral.
An equipment loan is a loan that is secured against the equipment that you are purchasing. Like a business loan, you’ll receive a lump sum of cash that you must repay with interest within a specified amount of time. However, unlike a business loan, most lenders will only finance 80% of your equipment price. As such, you’ll have to fund the other 20% yourself or use another form of credit to fund it.
Business Financing For Any Industry
Importance of Qualify For an Equipment Business Loan
Being able to qualify for a business loan is important as it can not only help you purchase equipment, but it can also help with cash flow problems, payroll, inventory, and other business expenses. According to a study conducted by the Government of Canada, businesses struggle to grow due to a number of factors including the rising costs of input, cash flow problems, debt problems, and inability to obtain financing. Small businesses with less than 100 employees particularly struggle to obtain the financing they need to grow their business.
|1-4 employees||5-19 employees||20-99 employees||100-499 employees|
|% of businesses who’ve struggled to obtain financing||8.5%||10.6%||8.8%||4.5%|
|% of business who struggle with cash-flow or debt problems||12.7%||15.4%||13%||11.6%|
|% of businesses who struggle with input costs||14.6%||18.9%||19.3%||16.9%|
Documents Required For an Equipment Business Loan
In order to help you qualify for the financing you need, we’ve listed common documents a lender will request when approving a loan.
- Personal credit score and business credit score – Whether you own a young or old business, lenders will often check your personal credit score along with your business credit score to determine your creditworthiness.
- Business Details – In order to identify your business, your lender will ask for your business address, business name, business license number and more.
- Financial records – Before a lender approves your business for financing they will evaluate your business’s financial health through certain financial documents to see if you’re capable of repaying the loan.
- Tax returns and bank statements – These documents will allow your lender to evaluate your monthly revenue and yearly earnings.
- Revenue statements – Your business sales records and revenue statements will allow your lender to understand your business cash flow, which plays a big part in persuading your lender to lend to you.
- Personal financial records – At times, particularly when you’re providing a personal guarantee, a lender will ask for your personal bank statements to verify your creditworthiness.
- Business plan – Start-ups and young businesses often have little to no financial information for a lender to evaluate. In such circumstances, lenders will request you provide a business plan. A business plan is a 2-3 page report that details why you need a loan and how you plan to use it to grow your business revenue.
Frequently Asked Questions
Where can I apply for a business loan for equipment financing?
I have bad credit, what can I do to increase my odds of getting a business loan?
How long can I finance equipment using a business loan?
How Loans Canada Can Help Your Business
While many types of equipment can eat into your business budget, that won’t be a problem when you choose us for your financing requirements. And, good financing isn’t the only benefit we can provide. In fact, there are plenty of other reasons to pick Loans Canada, including, but not limited to:
- A straightforward application that you can easily fill-out from home or work using your smartphone, tablet, laptop, or desktop computer
- A repayment schedule that is simple to follow and won’t drain your savings
- Competitive payment and interest rates that are financially advantageous
- A less critical approval process that’s faster than with any bank, credit union, or other financial institution (financing can be received in as few as 2 days)
- The chance to spend more time focusing on the needs of your business, because your equipment is financed and ready for use
Remember, Loans Canada is here to help set you up with the best source of financing for your business equipment. All you need to do is apply below!