In a nutshell, equipment financing is the act of applying for a sum of cash to cover specific assets. Most people will need to approach lenders individually, or with the helpful support of a loan broker. If approved, the cash received can reduce expenses by allowing the borrower to purchase the equipment that they need (from farm equipment to gym facilities) and then pay back what they owe with interest over time.
How does it work and a bit more information
When asking ‘what is equipment finance’, the easy answer would be to say that it’s a method of obtaining cash support from a lender. Unlike a regular loan however, the financial support can and should be used to pay for equipment. This equipment can vary depending on the industry and the borrower’s needs, but in most cases it will relate to assets that can be used to assist with the functionality of a business and its services.
Can individuals apply for financing?
In some cases yes, but the majority of clients and borrowers will hail from a business-oriented background. For example, if a company owner is trying to establish their new agency then they may find the cost of equipment such as electronic devices, furniture and fittings quite a substantial expense – and this may make their financial situation a little challenging in the future.
Instead of saving up and potentially losing out on profits, the company owner could apply for an office equipment loan to help to cover their initial costs; allowing them more money to spend where it’s needed. Likewise, a farmer may find that they require a new commercial vehicle or piece of machinery to run their farm – and a dedicated farm equipment loan might be more convenient.
The same can be said for gym equipment loans and medical equipment loans as well – and as these options are aimed at specialists in each field, they can be tailored to benefit the applicant and their needs (especially when using a broker to help to negotiate the terms of a borrowing agreement).