Equipment Loan vs. Lease: Which is Better for Your Business?

When you’re just starting your business, you’re expected to spend more than you earn. This means you will probably find yourself needing to purchase essentials for your operations, whether they’re specialized tools, heavy machinery, or transport vehicles. However, you may not have the capital at the moment to buy them.

Fortunately, you can opt to get equipment loans or equipment leasing to acquire much-needed tools for your business. Learn what kind of financing options are available to you.

Understanding Equipment Loans & Equipment Leasing

Equipment Loans

An equipment loan for a small business, also referred to as equipment financing, allows you to buy the tools and equipment you need. Your lender will give you the capital to purchase the tools or equipment as a loan specific for the items you need to operate or update.

The amount you receive is based on your plan and the lender’s terms, allowing you to borrow most or all of the total value you need. Once you’ve completed your repayment, you will fully own the tools or equipment you bought.

Equipment Leasing

Equipment leasing for a small business is different in that you won’t own the tools or equipment outright. With this option, your chosen lender will buy what you need from a vendor before renting it out to you every month. At the end of your lease contract, you have the option to renew, return, or purchase the tools or equipment.

What Are the Advantages to Equipment Leasing or Equipment Financing?

Although both options allow you to use the latest tools and equipment in your operations, their structures provide different advantages that are worth understanding.

The Advantages of Equipment Financing

  • No Need for Cash on Hand: One of the reasons this is considered one of the best financing options for a business is that you don’t have to pay any upfront costs, giving you instant access to the loan after your application gets approved.
  • Tax Incentives: Equipment financing is ideal for small businesses because it can be filed as a tax deduction, allowing you to lower your annual tax liability.
  • Less Documentation Needed: Unlike traditional loans where lenders require your entire financial history and credit score, equipment financing is more favorable and forgiving to small businesses. Most lenders simply need you to make your repayments on time.

The Advantages of Equipment Leasing

  • Use Current Technology: Equipment leasing is ideal for small businesses that need to stay up-to-date with the latest tools and equipment in their industries. It lets you use the most current technology without the cost and commitment of buying them.
  • Flexible Cash Flow: Equipment leasing doesn’t require a down payment, allowing you to use your cash on hand to pay for other needs such as payroll, bills, and inventory.

Which is Better for Your Small Business?

When deciding on a business financing solution, you should consider your immediate needs and how to best address them.

Whichever option you choose, you should remember that it will only be as good as the lender you choose! Probably is your partner in growing your business for both equipment financing or equipment leasing!

Learn more about our funding and term loans when you get in touch with us today!

Pros & Cons of Bridge Loans for Small Businesses

At a certain point, you might need to start spending more money on your business in order to make money in your business. But acquiring the capital for your growth plans can be difficult. With daily operating costs and other expenses, you need to find a new source of income or financing.

Borrowing money is nothing new in the world of business. Many do this to start an entrepreneurial career, while others do so to fund their expansion. No matter why you decide to take out a loan, you have to choose it carefully.

Bridging the Gap between Financing & Business Growth

Many financing solutions have become available to business owners recently. One of them is the bridge loan. But what is a bridge loan?

A bridge loan is a short-term loan that provides quick funding while you look for a more permanent solution. Business owners use it to handle an existing obligation and reduce their obstacles in the long run. It’s becoming common among small businesses, but before you take out a bridge loan, it’s essential to study its benefits and terms.

Here are the advantages and disadvantages of a bridge loan.

Benefits of a Bridge Loan:

Bridge Loans are a fast way to get funding for your immediate needs.

The whole process—application, approval, and funding—is faster than most other types of loans because our bridge loans have fewer requirements. This gives you the capital to purchase new or additional equipment, pay for inventory, or meet your payroll needs without affecting your bottom line.

Bridge Loans give you full control over your business.

For most loans, you have to sign over a portion of your business as collateral. But a bridge loan from Probably may only last a year, meaning you can quickly pay it back without having to relinquish control over your business.

Bridge Loans give you a safety net for other expenses.

As a small business, you are often at risk of running out of cash. Our bridge loans give you access to money that can be used to cover pertinent expenses. It’s a practical and valuable solution for businesses that have long payment cycles.

Potential Cons of a Bridge Loan:

It might have larger payments.

Since a bridge loan runs for a shorter period, you might be charged more during monthly repayments if you don’t choose a good company to work with, and understand their terms. Late payments will be met with penalties and higher interest rates as well. Make sure you work with someone trusted and transparent, like Probably, to ensure you get the best deal!

It could be risky for your short-term bottom line.

Business owners who take out a bridge loan while waiting on an extended payment cycle are at risk of failing to see that long-term money at the end. And when payments fall through, you will have to make your loan payments out of pocket. This is the risk with any loan, but is still worth mentioning. As always, only borrow what you expect to be able to pay back.

Work with Probably for a Trusted, Transparent Bridge Loan

Probably is dedicated to helping small business owners transform their start-ups into strong and sustainable organizations. Our bridge loans are customized to each client, giving them what they need without causing disruptions in their operations and cash flow.

If you need additional capital for your business, consider applying for a bridge loan from Probably today!

What Alternatives Are There to SBA Financing?

The past year has been tough for small businesses and aspiring entrepreneurs. The pandemic has forced multiple business sectors into dire financial situations due to public restrictions and safety protocols. At the height of the pandemic restrictions in March and April, small businesses in the United States were pushed to their limit. 

According to a survey at the time, more than 7.5 million small businesses were in danger of closing permanently due to the shutdown. 

However, these enterprises could turn to the Small Business Administration for financing. This organization has been trying to help small businesses for years and tried to provide a beacon of hope through uncertain times in 2020. But not every small business meets the SBA’s rigorous requirements to secure a loan, in fact – most don’t. And even if they do meet requirements, there simply isn’t enough money to go around, as was seen in 2020 when the SBA quickly ran out of stimulus and PPP funds.

So, what alternatives are available for entrepreneurs who need small business loans

Below are a few options you can explore if SBA financing isn’t possible.

1. Personal Loans

Your first alternative is to take out a loan yourself. This means that your personal credit history and credit worthiness will be scrutinized by banks and other organizations, rather than your small business’s profitability. If you have a stellar credit score, you could be fast-tracked for adequate loans to use to finance your business – but most people don’t have a great credit score, and it can be quite risky.

The downside of personal loans means that if you don’t manage to recoup your losses and revitalize your business, the obligation and consequences falls on your head, and on your collateral. This can mean liquidating personal assets, such as cars and residential property to pay for the loans should you fail to do so.

This is why personal loans are ultimately highly risky, and are only really used in dire times.

2. Loans from Friends & Family

If you don’t want to put your personal property at stake or your credit score isn’t up to par to secure personal loans, you can turn to people close to you for financial support. However, many people feel uncomfortable securing loans from their relatives or friends, as this simply moves the risk to them.

However, a benefit is that you can negotiate lower interest rates or find alternative methods for repayment in some scenarios. You could ask them to become investors, giving them a stake in your business in exchange for their loans too – though this still has the risk of losing it all (yours and theirs) if the business cannot be revitalized.

The key to borrowing from close friends and relatives is to be transparent about the odds of your business recouping its loss. You should also be diligent in making payments to avoid personal drama infiltrating your business.

3. Term Loans

If your business isn’t in financial trouble now, but you can see the writing on the wall, you may have time for a lengthy alternative to SBA financing. Term loans are one such option. 

You still have to meet the requirements for borrowing from the lender and wait through the lengthy application processes, but this might be quicker than an SBA loan in many situations.

These types of loans typically shell out higher amounts and come with low interest rates. However, they do tend to be more thorough with their assessment as they want to ensure you can return their money in due course. 

4. Equipment Financing

Sometimes your business model may not seem highly profitable to others and can torpedo your hopes for securing SBA financing or even other financial support. However, you can still turn to an alternative that does not take into account your business status or profitability as much. 

If your small business uses expensive equipment for its production process, you can use equipment financing to take out loans. These types of loans use your machinery as collateral, and your other assets won’t be part of the process.

This type of financing can be quicker, thanks to minimal paperwork. But you will be expected to provide a down payment. Some companies even require a down payment as a step in their process.

5. Online Loan Providers or Alternative Financing

If your business isn’t eligible for SBA financing and you don’t qualify for a personal bank loan, or it seems too risky, then you can turn to the internet for help!

Probably Yes offers quick and streamlined small business loans as a needed alternative to SBA loans, personal loans, or asking friends and family.

Our applications can take only a day or two for approval! Plus, we don’t need the extensive collateral that many others require. Some online small business loans have high interest rates, or prepayment fees in case you pay them back early – but not Probably!

Be sure you choose a reputable online lender like Probably Yes, and always check reviews, affiliates, and history to ensure you are getting your loan through a company that doesn’t cut corners.

Contact Probably Yes For Your Small Business Loan + An Alternative to SBA Loans

Times have gotten tough for small businesses, but there is hope on the horizon!

Thanks to the efforts of the private and the public sector, these uncertain times may end in the foreseeable future. However, until that happens, consider a seamless online small business loan provider to stay afloat with financing options that work for you. 

We make small business loans fast and easy. We’ll work with you to help you get the working capital you need when you need it. Call Probably at (844) 940-2303 today.