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Every business, regardless of size or industry, relies on equipment for its employees to complete tasks. This equipment ranges from basic computers and printers to advanced machinery and technology. For instance, a retail store may need point-of-sale systems and inventory management software, while a commercial construction company might require heavy machinery and job site trailers.
Buying business equipment can be expensive, especially for companies that need multiple assets. As a result, many business owners opt to finance their purchases. It is highly beneficial for businesses to work with equipment vendors that provide in-house financing. In this Balboa Capital blog article, you will learn about equipment vendor financing and some of the ways it benefits businesses.
Equipment vendor financing at a glance.
Equipment vendor financing is a straightforward concept. It involves securing funds directly from the vendor who sells the equipment. Vendors who offer in-house financing partner with a third-party lender to facilitate transactions. Some business lenders provide their vendor partners with value-added financing services, such as a private label online finance application and an online account management system that lets vendors track sales results.
In-house financing is a win-win for all parties involved. It enables businesses to obtain equipment quickly, helps vendors close more deals, and provides recurring business to lenders.
Benefit #1: Greater convenience.
When you step into an equipment vendor showroom or visit a lot that showcases equipment and find what you’ve been searching for, you need to act quickly. If there is a high demand for the equipment, it might not be available for long. In-house financing from your equipment vendor, if available, can ensure you secure the equipment before someone else does.
You can apply for funding while you are physically present at the equipment vendor’s facility. Depending on the specific lender the vendor works with and their approval criteria, you could get a credit decision while you wait. If your application is approved, you can proceed with your equipment purchase without unnecessary delays.
Benefit #2: Less initial expense.
It is vital to watch your company’s budget and not overspend. This practice can help strengthen your business’s financial health and preserve capital for future needs. So, when it comes time to invest in new or upgraded business equipment, financing it through your equipment vendor is a cost-effective solution.
With vendor financing, you won’t need to put forth a substantial down payment at the time of purchase. Instead, you can get the equipment with little or no down payment. You will then make predictable monthly payments over the term length.
Benefit #3: Fast equipment acquisition.
Financing your equipment purchase directly through a vendor can accelerate each step of the process, leading to a faster turnaround time. As a result, you can obtain business equipment sooner rather than later, which is crucial for completing tasks and maintaining business operations. This is a tremendous benefit if you need to replace broken, outdated, or malfunctioning equipment.
Acquiring equipment in a timely manner can help minimize downtime and prevent productivity losses among workers. Of course, timely access to equipment enhances employee morale and allows workers to meet deadlines and maintain your business’s standards for quality
Benefit #4: Preservation of cash flow.
Maintaining a healthy cash flow is vital for your business’s success and growth. If you are in the market for new or used equipment, financing it through the vendor is a viable option to alleviate immediate cash outflow. Vendor financing allows you to acquire the necessary equipment for your business without using up your cash reserves.
You can spread the cost of the equipment over time with monthly payments that work with your budget. This ensures you have the necessary working capital for daily operational expenses, unexpected costs, and potential growth opportunities.
Benefit #5: More flexible financing.
In many cases, equipment vendors that partner with third-party lenders can offer more flexible financing solutions tailored to the needs of business owners. These partnerships allow vendors to leverage the industry expertise and lending capacity of lenders, resulting in financing plans that include lower down payments, extended repayment periods, and favorable interest rates.
As a result, business owners might find it easier to secure financing that aligns with their equipment needs and budget. Ask your equipment vendor’s sales manager if they provide in-house financing. If they do, ask about their financing terms and rates based on your business’s credit profile, annual revenue, and other borrowing criteria.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.