Definitions

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Equipment Loan

An equipment loan is capital offered to businesses that are buying new equipment or replacing current equipment. An equipment loan will usually come from sources such as banks, and as such will often have a specific purpose and may have strict limits on usage.

An equipment loan can usually offer fixed or variable interest rates, flexible repayment terms, variable payment frequency, and possible tax benefits (as always, talk to your accountant or tax professional to determine all possible benefits and requirements). An equipment loan can help companies to retain and build equity.

Equipment loans are typically written for terms of up to seven years. There is usually a documentation fee when the loan is initiated. Equipment loans from banks will vary in terms of borrowing amounts and borrower eligibility. The amount of the loan depends on the value of the equipment or "fixed asset" being purchased or refinanced as well as other factors which may include creditworthiness of the business or business owner.

There may also be a number of financial alternatives open to those seeking to obtain equipment for their businesses. Depending on your specific needs and business situation, you might be able to consider a host of financial options including leasing, lines of credit or Merchant Cash Advances. An equipment loan from a bank, if your business is eligible, should be considered when acquiring new equipment. However, it is always wisest to compare all available methods of raising working capital whenever your business needs money for growth or to meet unexpected expenses.

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