Here’s How Equipment Financing Can Benefit Your Business
As you grow and fulfil more demand, your business needs for the right machinery and equipment are sure to increase. Update yourself about the right equipment financing to help your business stay competitive.
The introduction of new machinery in the business sector has made work easier, increased productivity and, in some cases, increased the precision of work too. But like humans, machinery also has a retirement age. You cannot utilise machinery for years together, without maintaining, repairing or updating it if you could its output to be at the most desirable level. If you run a pharmaceutical manufacturing unit for example, equipment like octagonal blenders need to be replaced after every seven to eight months. This is done so that the efficiency of your machine and your business increases.
However, it is not easy for to replenish your machinery time and again using personal finances. Often, this requires considerable amount of cash and can be done only if there is proper cash flow available in your business. Business finance is an option that ensures constant cash flow for buying equipment, repairing it or upgrading it when the need arises. Although there are many options for business finance, business loans are the most popular way to infuse the necessary funds into your business. Business loans offer a special loan known as equipment loans for you to buy new machinery or repair existing equipment.
What is Equipment Financing? Why is it important?
Equipment finance is a loan that is given to you by a lender to buy or upgrade machinery and equipment necessary for your business. This type of business loan does not require an outside guarantor or the need for collateral. An Equipment Financing is important because it helps you purchase, rent, lease, repair, upgrade or maintain the machinery that is at the core of your business. Rather than spending needed working capital or your personal savings on new machinery, an equipment loan provides a prudent financial solution for your needs. It also gives you the option of taking a Line of Credit instead of a term loan if your need for equipment may change in the future or if you are not sure of the total amount needed for purchase. Since this facility only charges you interest as monthly EMIs, this helps you manage your cash flows more easily.
Benefits of Equipment Financing:
- Easy to obtain
Equipment financing asks only for the most basic documentation. Making it simpler by applying for Machinery Loan online. Since there is no requirement to pledge your assets as collateral, the application process is quicker, and the approval of your application is also done faster.
- Improves productivity of your business
Since it helps you buy or improve the equipment or machinery that is required for your business, it helps increase business competence and output, which in turn will improve your revenue. What’s more, your working capital will not be affected and daily operations will continue to run smoothly.
- No down payment required
In most cases, 100% financing requires down payment. However, Equipment Financing lets you acquire financing without any down payment. This will save money and help maintain your working capital. It also helps you make your EMI repayments from the business revenue generated by using the machinery bought from the equipment loan.
- Helps upgrade and enhance existing machinery
Equipment financing doesn’t just help you buy new tools. It can be used to upgrade your old equipment and machinery, whether it is by replacing an expensive part, adding new software or even cleaning large machinery.
Here are a few other benefits of Equipment Financing:
- Allows tax benefits in some cases
- Facilitates equipment disposal
- Helps in preserving cash for other needs such as working capital
An important tip when you choose Equipment Financing
Since equipment financing is to be used for the purchase of helping your business improve or purchase needed machinery, you may be tempted to buy more than your business currently needs. Buying more than is needed creates a shortage of funds and space and may also require you to hire more trained workers to use the machine. All this cost may not be justified at certain stages of your business. Thus, ensure that you carefully plan how much money you need for machinery right now and how to repay it using your business revenue and profits.
Equipment financing, also known as a machinery loan, is the easiest way of getting the funds to invest in the right machinery or equipment that have the power to earn you more profit. With easy online application, fast approval and no collateral, a Machinery Loan from Bajaj Finserv may be the solution to your business needs.