Dallin Hawkins, Director of Sales & Operations - Integrity Financial Groups, LLC Discusses Four Overlooked Benefits of Equipment Financing
Midvale, Utah, October 7, 2016 (Newswire.com) - Integrity Financial Groups, LLC specializes in Used Truck Finance, Used Equipment Finance, Heavy Equipment Finance, Commercial Truck Finance & Medium Duty Truck Finance. Our experienced underwriting professionals have over a century of experience in structuring financial transactions that gives our customers a strategic advantage by having a stronger funding partner with the necessary financial resources.
Four Overlooked Benefits of Equipment Financing
New businesses are often in a financial quandary because they lack both the capital to expand quickly when opportunities present themselves and cannot qualify for a loan without posting a substantial down payment. To make a good impression with potential lenders, it is critical to both borrow money and repay it in a timely manner and equipment financing meets both these objectives.
Dallin Hawkins, Director of Sales & Operations
There are some disadvantages to new equipment financing; chief among them is the fact that, over the long term, financed transactions are much costlier than cash transactions. This particular disadvantage is easy to overcome, however, simply by adding an extra few dollars to each monthly payment.
There are also a number of advantages to new equipment financing, and not all these items are readily apparent. In a nutshell, new or used truck financing and new or used equipment financing gives your business the flexibility it needs to grow during growth seasons without being weighed down with excess costs during slow seasons.
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New businesses are often in a financial quandary because they lack both the capital to expand quickly when opportunities present themselves and cannot qualify for a loan without posting a substantial downpayment.
To make a good impression with potential lenders, it is critical to both borrow money and repay it in a timely manner and equipment financing meets both these objectives. With an established history on secured loans for equipment and fixtures, it is much easier to obtain unsecured loans for construction and expansion at lower rates.
Most new businesses operate at a loss for at least several months, if not several years. So, in addition to raising revenue, conserving capital is a key priority. Although spending $20,000 on a new GPS tracking system or other equipment may sound like a good idea, that capital outflow may be too much for a new business to absorb, especially in the event of an unexpected downturn.
Instead, if the purchase is financed at 8 percent for five years, the payments would only be about $400 a month. The remaining funds can be funneled back into the business, thus improving cash flow and making the payments even more affordable. In this way, financing essentially pays for itself.
Most lenders will consider refinancing a loan after twenty-four months of on-time payments and the lower interest rate will conserve even more capital. As an additional added bonus, finance charges may be tax-deductible, allowing the business to shift capital away from tax payments.
To go with the previous example, assume that a next-level GPS system is available for $25,000. If the amount is financed at the same rate and term, payments would only inch up about $100 a month. If this system increases delivery efficiency even more, which it probably will, the resulting revenue stream is even higher, thus multiplying the effect previously discussed.
In addition to improving service for existing customers, better equipment can help you attract new business. Potential customers are always looking to do more for less, and a new cutting-edge system may strike a chord with them.
Just like some businesses are hard-pressed to pay for equipment in cash, standard monthly payments may also be burdensome for seasonal businesses. Many financing companies offer more flexible payment arrangements, such as quarterly payments or even deferred payments, to accommodate these needs. Balloon payment financing may also be an option for some businesses.
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Source: Integrity Financial Groups, LLC