Lenders like Wells Fargo and Chase are very good for servicing the needs of established businesses; they support things like checking accounts, small business loans and merchant accounts very effectively once you have established your business and developed a good track record. As an “A” credit you will get the best rates up to a certain lending cap for the size of business you operate.
The challenge is if you are a startup or have what they determine as bad credit, you will not need a calculator to figure out that the good rates will not be offered to you or they won’t be able to work with you at all; particularly the riskier categories of business like food service or home based businesses. This is where independent equipment financing companies fill the void with their ability to service the riskier markets along with the “B” through “C” level credit profiles. They can offer heavy equipment financing, working capital loans, energy system financing, which many banks prefer not to fund, and startups with less time in business very competitive loan rates today.
How does equipment leasing work? First you complete an equipment lease form or credit application, provide base financials like tax returns and bank statements and then allow the equipment leasing company to perform a credit and financial review. Third party lenders or equipment leasing companies often specialize in certain types of equipment or certain types of businesses; it is best if they are familiar with what you do. Then they run their numbers through an equipment leasing calculator to offer you a monthly payment with general terms once you are approved. The top 100 leasing companies all follow a similar process; the difference is the area they serve and types of businesses they cater to. So if you are looking to lease heavy equipment, don’t go to a company which clearly focuses on medical equipment. Our experience is the best equipment leasing companies are bonded and licenses to insure the safety of their clients.
The equipment leasing definition is: to finance equipment for your business which you intend to keep and own or which you only intend to rent and keep for a certain period of time and return it. This is either a capital lease (https://www.firstusfinance.com/capital-leases/) or an operating lease and if you have ever leased a car then you are familiar with the operating lease (https://www.firstusfinance.com/operating-leases/) used primarily by the automotive industry. Every small business should have access to capital if they are to grow and prosper; the cost of that capital is based on the risk of your business and as time goes on and you become established that capital will cost less along with your ability to borrow more.