June 6, 2023

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Equipment financing creates more options for small business owners

Are you in need of new equipment for your business, but not sure you have the means to pay for it?

Are you in need of new equipment for your business, but not sure you have the means to pay for it? This is a concern for many small businesses, especially in today’s economy while the world continues to recover from the effect of COVID-19 and supply chain issues which are impacting all industries.

Tyler Ehlers and Dave Malucky, Leasing Account Executives at Vectra Bank Colorado, share their insights on how business equipment financing may be the solution for many business owners facing this scenario.

What is equipment financing?

An equipment financing line is a pre-qualified credit line than can be used to finance business equipment. This allows business owners to be prepared with existing financing so they are ready to buy when they need the equipment – much in the same way that you can get pre-qualified for a home mortgage. It also allows an organization time to find the exact equipment they need, but then be able to process a takedown quicker than if a credit line wasn’t already in place

How can it help small businesses?

The greatest benefit to equipment financing is the flexibility it provides. Business owners know what they can afford but have up to one year to determine what equipment they need and when the best time to purchase it will be. It frees up the assets they have on hand for things such as hiring and paying employees, since it costs nothing to set up the credit line – they only pay a monthly payment once they purchase equipment. 

This flexibility is also helpful for future planning. Business owners can plan ahead for a time of year when they may have more cash flow, or plan for busier seasons when they may need additional equipment. And knowing how much financing they have available, owners are more likely to seek other new equipment that they may not have considered purchasing before. It may also provide more negotiating power with the seller when they know that you have the funds readily available.

Lastly, having pre-approved financing in place can alleviate some of the stresses that supply chain delays could be causing. A lack of products, such as chips for vehicles and computers, is causing delays in the availability of supplies and leaving businesses waiting for months on end. With a line of credit, organizations are able to wait for supplies to become available and pay for them once they are delivered.

What types of equipment can be financed?

Typically, any equipment used for business purposes can be financed: trucks, trailers, construction equipment manufacturing equipment, and computers. While this type of equipment is generally the most common to finance, every type of business has equipment needs. For example, an insurance company or law office could finance their computers, furniture and phones. Vectra Bank is currently financing medical equipment for facilities throughout the Western Slope and even snow groomers for some of Colorado’s ski resorts. 

What tips can you offer for obtaining lending?

Companies that have been in business for at least two years and can show a profit are more likely to be approved for financing, while start-ups may be better off seeking an SBA loan. A strong credit score helps, along with having an organized financial package. The more quickly a business can provide the needed documentation, the more quickly they can be approved. 

Why choose equipment finance vs. a traditional business loan?

An equipment lease can be financed for 100% of the invoice amount, whereas a traditional bank loan is generally for just 80% and comes with more restrictions. A lease also often provides a lower monthly payment than a traditional loan. It can also help save money in the long-term, since renting equipment typically costs twice as much as paying for it. 

“There are really no drawbacks to equipment financing. Our customers are happy with process and happy with the end results,” said Tyler. 

With a bit of preparation, business owners can access the equipment they need to successfully run their businesses. 

Dave Malucky, Leasing Account Executive at [email protected] or 720-947-7680.

Tyler Ehlers, Leasing Account Executive at [email protected] or 720-947-7779.

We welcome you to contact us at any time to address questions or address your needs:
Equipment financing & leasing are subject to credit approval; certain criteria applies. See specialist for details. Equipment financing & leasing are offered through Zions Credit Corporation, a subsidiary of Zions Bancorporation, N.A.

(Sponsored content for this article provided by Vectra Bank Colorado)

Equipment financing creates more options for small business owners