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Is It Difficult for a Small Business to Get an Equipment Lease?

When starting or expanding your business, you will need equipment such as furniture, electronic devices, and software. You can either choose to buy them outright or to borrow them using a lease or loan. The latter option is often preferable, especially for small businesses that might not have the resources to buy all the top-notch tools they need. An equipment lease allows you to conserve your capital while remaining flexible at the same time.

But how hard is it for a small business to receive such a lease? Will it be prohibitively expensive? The answer is that several factors affect your eligibility, and they include the age of your business, your financial stability, and the size of the lease you are asking for. Today, we will have a closer look at how we evaluate businesses and what you can do to increase your chances of a positive outcome.

How Hard Is Getting an Equipment Lease? 

It’s not always easy for a small business to get started. If you have a physical location, you will need to pay for staff, rent, furniture, and professional equipment. Having to pay for everything upfront might make it almost impossible for you to open a new branch. However, this isn’t usually the case. Lenders such as Noreast Capital allow you to lease your equipment so you can spread out the cost and allow your business to grow before you pay.

When considering you for a lease, we will take several factors into consideration. Depending on your company’s age and the profit you are making, we might offer you a lease line of credit. When you’re ready to borrow your first piece of equipment, you won’t have to apply again, and we will simply be able to provide it. Your personal account manager can let you know how much you may be able to borrow.

The Age of Your Business 

A crucial factor is how long you have been in operation. Most lenders prefer companies that have been running for at least two years because they have had time to become established and make a profit. Such businesses have records of their sales and expenses, which allows creditors to see whether they are making a profit and how much they will be able to pay.

However, just because you’re a new business doesn’t mean you won’t be eligible. There is a chance that you can borrow from us even if you are just getting started. To make a decision, we will look at the financial background of the owners. You will almost certainly have to back your lease with a personal guarantee in such a case, and we might ask you for additional documentation like your business plan or your supplier contracts.

The Financial Health of Your Business 

Every high-quality lender will do their due diligence before issuing a small business with a lease. When you apply to Noreast Capital, we will require you to provide certain financial documents. They include bank statements, trade references, or financial statements. To make the process easier, you should have all your paperwork in place before you contact us.

Once you have provided us with the necessary documentation, the equipment lease application process is surprisingly straightforward. Depending on the size of your lease, you might receive an answer within a few hours or a few business days. You can then select the tools that best fit your needs and either pick them up or have them delivered to your location.

The Size of the Lease 

Before providing you with a lease, we will check that you are able to handle the amount you applied for. Smaller and newer businesses should get started with a minimal amount so that they don’t run into problems later on. As your company grows, you can then increase the size of your debt to help you expand faster.

In general, amounts under $50,000 are reasonably easy to receive. If you are an established firm, you won’t even have to provide us with financial statements, and the application is a simple one-page form. Any amount over this threshold will be checked more closely since your monthly payments could be substantial.

Ways to Ensure Eligibility 

As you can see, getting a lease for your business isn’t extremely difficult, but lenders do check that you have a sound financial background. The process is easiest for businesses that are over two years old and are able to demonstrate solid and steady performance. If you don’t fall into this group, there are several ways you can ensure eligibility.

For example, you can back your lease with a personal guarantee, which means that you will be liable if your business can’t pay. Alternatively, a guarantor with a stable background could help. Your account manager might ask you to provide documentation such as your business plan, resumes from the company’s founders, and pro forma financial statements, which can prove that you are experienced in your field and on track to make a profit.

Why Leasing Could Be a Great Strategy for You 

Getting a lease is possible for most businesses, but it will take some time and effort. Is it worth the hassle? In most cases, the answer is yes. Not only can you conserve your precious capital, but you can also remain flexible and adapt to changing market conditions more quickly. The type of lease you get can be tailored to your company’s needs, and you can choose from a wide variety of equipment, no matter what industry you operate in.

Conserve Your Capital 

Arguably the most important reason why you should lease your tools is that this allows you to conserve your money. If you are a new business, you might not have the option to buy everything you need, so leasing is the way for you to start out with high-quality equipment. For more established businesses, it is a way to grow faster and reinvest your capital to expand the company.

When opening a new branch, you might have to pay for additional employees as well as rent. This can be enough of a financial burden, and leasing the furniture and equipment can take some of the pressure off. That way, you might be able to expand faster and therefore make more of a profit in the long run.

Retain Flexibility

Another key benefit of an equipment lease is that you don’t have to lock yourself into an expensive deal. Our terms are often between 12 and 36 months, and at the end of the lease, you can choose to keep the tool, give it back, or take out another lease. If your needs have changed or the market is different, you can simply choose something else.

This is particularly important when it comes to equipment that is time-sensitive, such as electronic tools and software. These items need to be updated frequently, but they can also be extremely expensive. By getting a lease, you can stay on top of current trends and upgrade much more frequently, since you didn’t spend all the money upfront.

Choose a Plan that Suits You 

Every company is different, which is why we at Noreast Capital offer such a wide range of leases to suit various needs. If you already know that you would like to buy the equipment at the end, you can go for a capital lease, which allows you to purchase the objects at a minimal price, such as $1, once your lease is up. If not, you can opt for a contract that offers you multiple possibilities at the end, such as giving back your equipment or upgrading.

Brand-new business might benefit from a special contract that doesn’t require payment for the first few months. You will be able to build up a clientele before having to worry about paying for your equipment. Similarly, seasonal businesses can pay less during the quiet months and more when they are busiest to prevent cashflow problems.

Choose from a Wide Variety of Products 

In terms of the equipment you can lease, there is an enormous variety available. In addition to furniture, you can also choose from a wide range of industry-specific tools and electronic gadgets. In fact, we even offer software for accounting, client interaction, graphic design, and more. No matter what you need, you should speak to our customer service team, who can present you with all the options.

Getting an equipment lease can be a challenge for small businesses, but it is not impossible. As long as you have a good financial history, have been in business for a few years, or are willing to personally guarantee the lease, you should be able to borrow all the equipment you need. The best way to find out more is to get in touch with a lending company and explain your situation.

You will be allocated an account manager, who can take you through the application process and help you increase your chances of getting a great deal. They might speak to you about the kinds of financial documents you need to provide and how much equipment you can expect to borrow. Call us today at Noreast Capital to find out more and open your lease line of credit.

How Long Can You Finance Heavy Equipment?

Businesses that require large machines often have high overhead costs. To get started or to expand such a company, heavy equipment financing is needed, as the cost of these items is often prohibitive. Luckily, there are leases and loans available to suit every lender, and they can be of various lengths. That way, businesses retain their flexibility and capital while gaining access to the best machinery available.

How Long Does Heavy Equipment Financing Last?

Normally, the people who lease equipment from us will opt for a term between 12 and 36 months. However, heavy equipment can be borrowed for much longer, since it usually lasts for many years. The length of your lease will depend on several factors, such as the useful lifespan of the type of equipment you need and whether you are opting for a new or used machine.

What’s more, we can tailor your lease to your specific needs, so it can be shorter if you don’t know exactly what you will want to do in several years’ time. That way, you can choose to end your lease and move on to different projects, extend it and keep using the piece of equipment, buy the item up front, or even upgrade to a newer version and take out a new lease.

Types of Heavy Equipment

Almost all types of heavy equipment can be leased, and we work with a wide variety of brands, so you should find exactly what you need from us. If your business is agricultural, you might have to borrow a tractor or machinery for specific harvesting processes. Many businesses in the construction industry need cranes, tunnel boring machines, and various types of saws.

Other equipment required for various businesses might be street sweepers, dump trucks, backhoes, and pile drivers. No matter what your requirements are, you should get in touch with us at Noreast Capital and speak to your dedicated account manager. We can figure out how to access the equipment at the best price possible.

Considerations

Together, you and our specialist will decide what the best loan term is. If you expect to use the piece of equipment for the foreseeable future, you might opt for a new machine and a long lease term. However, if you aren’t sure yet or you only require it for a specific project, you could go for a much shorter time frame and return the item to us as soon as you no longer need it.

In such a case, you might consider choosing a second-hand machine, as this could be cheaper and more flexible. As your needs change, you can always come back to us and ask us for an upgrade and a new lease. Because you won’t be locked in for a very long time, you’ll have the flexibility you need to change your strategy and expand or update your business.

What Type of Financing Is for You?

The most common type of heavy equipment financing we offer is a lease, but you could also opt for a loan if this better suits your needs. The two ways of borrowing are quite similar, but ownership of the piece of equipment is handled slightly differently. When you lease, we remain the owners, and you are more flexible at the end. On the other hand, a loan allows you to buy the item off us with a small down payment upfront.

Leasing

Leasing allows you to use the piece of equipment you need without actually purchasing it from us. For the duration of your lease, we will own the item, but you get to use it by paying us a monthly fee. There are different types of arrangements, which makes this agreement extremely versatile. For example, you can choose a long lease and start using your machine without paying any money upfront.

At the end of your term, you can buy the equipment from us for $1. Alternatively, you could choose a much shorter lease, maybe two or three years, and either purchase the item at fair market value or give it back at the end. This second arrangement can be great for businesses that are just starting out or that are facing uncertain market conditions, since they retain all the flexibility.

A Loan

When you opt for a loan, you are buying the piece of equipment you need from us on finance. This means that you will have to provide us with a down payment, which might be around 15% of the total value of the item you’re purchasing. Then, you will repay us the remainder in monthly installments over several years. Because heavy equipment is expensive, it might take you 6-10 years to fully pay off the item.

In general, the interest rates can be lower for loans than for leases, so you could pay less in total if you choose this option. However, you will have to put down a deposit, which can be a lot of money if the equipment you need is very expensive. What’s more, you have less flexibility than with a lease because you don’t have the option of returning the equipment or upgrading at the end of your loan term.

Your Application Process

Now you know what you can lease and how the various arrangements differ, you might wonder how challenging the application process is. Fortunately, you can receive an answer in a very short time. Simply submit our application form, and your dedicated account manager will get back to you with some options. If you’re looking for under $50,000 in credit, you’ll receive an answer within a few hours.

For businesses that need more than this amount, the process might take one or two business days, as you’ll need to submit additional financial statements. To avoid this wait time and make sure you’ll be able to get the financing you need, you could open a lease line of credit ahead of time. This means that you’ll have the credit your business requires whenever you’re ready to start acquiring equipment.

What Are the Benefits of Borrowing Your Heavy Equipment?

When it comes to setting up your business or expanding your current operations, there is a lot to consider. You’ll need some office space, a number of specialized employees, and all the equipment required for the work. Because the first two points can be expensive, it’s often easiest to finance the last one and conserve some of your capital.

Nowadays, there are so many different options available to borrowers that you’re sure to find the exact lease to suit your needs. This gives you and your business more flexibility, so you can quickly respond to different market conditions and upgrade your equipment when needed.

Conserving Your Capital

The most important reason why most companies lease or finance their equipment is that they can conserve their money that way. Many startups don’t necessarily have enough funds to purchase everything they need, so borrowing is the only option open to them. A flexible lease is the best way forward because there is no hefty down payment required.

Similarly, businesses that are expanding already have a number of costs to deal with, so not having to purchase all their equipment upfront can be a relief. Heavy equipment financing allows such firms to deploy their resources more efficiently. For example, they can invest the money saved back into the business and generate more revenue.

A Lease Tailored to Your Situation

Every business has different requirements, which is why there are so many types of arrangements available. If you’re just getting started and don’t have a lot of revenue yet, we can delay your payments for the first few months, which allows you to use all your resources on building up a clientele. Similarly, businesses that operate seasonally could benefit from higher payments during the ‘on’ months and lower payments during the ‘off’ months.

At Noreast Capital, we offer numerous such arrangements, which can facilitate the running of your firm and help you stay on top of your running costs. You can speak to your account manager about the specific requirements of your company and the fee structure that works best for you.

More Flexibility

Heavy equipment is expensive and usually very big, and it is a long-term investment. If you buy your machines upfront, you will have to keep them for at least ten years to justify the cost, and you’ll also need a permanent place to store them. However, a lease can be shorter than this, so you could use your equipment only for the projects that require it and then return it to us once the work is completed.

This is especially useful for businesses with a somewhat open future. Maybe you’re not sure yet whether you’ll want to expand, or you are currently exploring a new niche. In such a situation, leasing can be the perfect way to keep your options open.

Heavy equipment financing brings many benefits for business owners, who can keep their capital and invest it back in the business, remain versatile and adapt to market conditions, and structure payments in a way that suits them. Call us today at Noreast Capital to find out more and get started with us. You could have your lease or loan in place within one to two business days.