A Guide to Start-up Equipment Financing in 2024

The proper equipment is essential for success in 2024's competitive start-up landscape.

However, purchasing the required equipment and technology can be expensive for aspiring business owners. This is where obtaining equipment funding becomes essential for a start-up.

In this guide, we will examine major trends, funding choices, and tactics to assist businesses in navigating the challenging landscape of obtaining necessary equipment, which explores the condition of equipment loans for start-ups in 2024.

In this article...

1. The Importance of Equipment Financing
2. Types of Equipment Financing
3. Benefits of Start-up Equipment Financing
4. Strategies for Successful Equipment Financing
5. 3 Ways to Evaluate The Right Time To Finance

The Importance of Equipment Financing

Having the right equipment can make all the difference if your start-up wants to compete in today’s market. Proper equipment, whether you need an automatic screen printer, a special tow truck, or a skid steer for landscaping, having the right tool is crucial for taking your start-up to the next level.

Thanks to equipment financing, start-ups can obtain the necessary funds to purchase these essential assets without unduly straining their initial capital.

Types of Equipment Financing

Acquiring the necessary assets for their operations requires start-ups to navigate the complex world of equipment finance choices. This section will examine the options available to meet the demands and preferences of different budgets.

Start-ups can choose from various options, including flexible financing plans to obtain the equipment required for long-term expansion. Start-ups can make well-informed selections that align with their specific needs and business goals.

Let's examine the variety of equipment financing choices and clarify the unique benefits and factors related to each.

Flexible Financing

• 100% Financing: Looking to keep cash in your hands? Get financing with no money down and use your liquidity for operating expenses and investing in crucial areas of your business.
• Buy Now, Pay Later: Need time to generate revenue? This plan offers deferred payments for 90+ days so you can start using your equipment before your first payment is due.
• Skip or Step Payments: Are you tired of the typical payment structure by other lenders? We can get creative with a flexible payment structure that matches your cash flow goals.
• Seasonal Payment Program: Have an inconsistent revenue stream? Make it easier for your business to grow by getting a creative payment plan that matches the timing of your sales.
• Equipment Upgrade Program: Want to replace your old equipment? Build your business by upgrading to new equipment while maintaining a consistent monthly payment.
• Wrap Financing: Looking to acquire multiple equipment units at once? Save a little bit of money on your monthly budget while keeping it simple with one monthly payment.

Equipment Lease-to-Own

If your start-up needs to acquire equipment, then leasing is a great option. Leasing allows businesses to finance a portion of the equipment and the rest is set up as a purchase option at the term’s end. This option allows you to keep payments low during the term.

These financing methods offer options suited to your business’s specific requirements, helping start-ups add equipment that generates revenue for a low monthly payment.

Under this arrangement, start-ups lease the equipment and pay periodic payments, with the option to buy the equipment after the lease term.

What Are The Benefits of Start-up Equipment Financing?

Start-up equipment financing opens a world of possibilities for new businesses. Let’s delve into the advantages:

• Wider Credit Window: Unlike traditional loans, equipment financing often has more lenient credit requirements, making it accessible to a broader range of start-ups.
• Flexible Payment Programs: Tailored payment plans allow start-ups to manage their budgets effectively and allocate resources to other essential expenses.
• Conservation of Capital: Start-ups often have limited financial resources. Equipment financing allows small businesses to preserve their capital for other essential expenses like hiring, marketing, and day-to-day operations.
• Predictable Costs: With a manageable fixed monthly payment for loans or lease agreements, start-ups can budget more effectively.
• Up-to-Date Equipment: Leasing can provide the advantage of regularly upgrading to the latest equipment models, ensuring that the business stays competitive and efficient.
• Tax Benefits: Equipment financing may offer tax advantages, as the interest on equipment loans and lease payments can often be tax-deductible.
• Long-Term Partnership: Establishing a relationship with a reliable financing partner can pave the way for long-term collaboration to get you a better deal in the future.

Discover how each of these advantages can help your start-up thrive and make informed choices for your business’s future.

SEE IF START-UP FINANCING IS RIGHT FOR YOU

Strategies for Successful Equipment Financing

Purchasing the right equipment is an important step toward operational effectiveness and competitiveness. It is necessary to navigate the process carefully, from determining equipment needs to obtaining finance.

This section explores methods you can use to increase your odds of a successful equipment financing experience. These proven strategies can help companies navigate the complex world of equipment financing more successfully and effortlessly.

Thorough Needs Assessment

Determine which equipment you will need before looking for financing.

This includes determining the precise equipment needed, how long it will last, and whether technology will eventually become outdated. A thorough comprehension of these variables enables entrepreneurs to select financing solutions with knowledge.

Build a Strong Business Case

Present a compelling business case to potential lenders.

This involves showcasing the equipment's potential to boost output, reduce expenses, or generate income. Strong commercial arguments increase the likelihood of approval and can even result in better terms.

Embrace Fast & Easy Application Process

1. Apply: Submit your application online in minutes at beaconfunding.com/apply-now
2. E-verify: Our process is 100% digital. Securely share your bank statements online in seconds using DecisionLogic.
3. We Build Your Plan: During a call, we’ll discuss your equipment financing goals to build the right plan for your situation.
4. Application Review: If you’re approved, we’ll send over your agreement through DocuSign. Accept and sign with the click of a button!
5. Get Your Equipment: Once it arrives, let us know! After you have provided us with a verbal confirmation, you’re all set and the vendor gets paid!

3 Ways to Evaluate Whether Now Is The Right Time for Your Start-up to Finance Equipment

Is now the right time to finance equipment for your start-up? Stop guessing, use these three indicators to see if you can comfortably afford to add equipment today.

• Cash Flow: Can your revenue cover the cost of your monthly payment? Breakdown the cost of your equipment to decrease upfront costs and add it sooner. Cashflow allows you to maintain liquidity while expanding your business.
• Tax Savings: Financing equipment may qualify you for a major tax deduction. If your business finances equipment before December 31st and uses it before the end of the year, you'd be amazed at the amount you can save!

SEE THIS YEAR'S SECTION 179 DEDUCTION LIMIT

• Return on Investment: How can my equipment pay for itself? With financing, you can generate revenue while still paying for your equipment. Beacon Funding's Breakeven Calculator calculates how many jobs you may need to complete each month to cover your financing costs.