Equipment Finance
Benefits and Financing Options for Audio-Visual Equipment
The benefits of audio-visual equipment have been described and its importance has also been made known. For individuals or organizations in need of revamping or upgrading the workplace to include an audio-visual system that can support peculiar work to such an organization as well as drive productivity.
Purchasing audio-visual equipment can be a bit challenging due to the cost of acquiring these tools, some of which are highly sophisticated and consequentially expensive. However, it is still quite important to obtain this equipment in a bid to increase work output.
Purchasing this audio-visual equipment can by straining on finance, another better option of going about obtaining these tools is through equipment finance.
Equipment Financing
How Equipment Financing Works
Equipment financing as the name implies a loan is taken to purchase business-related equipment, in this case, audio-visual equipment, these type of loans are repaid over a specified period with interest. Depending on the type of loan obtained there might need to have collateral against your debt, other types of loan does not require collateral however a lien is placed on the equipment purchased with the loan. The equipment becomes fully the owner’s own without lien after repayment has been done.
Financing Rates
The calculation for rates depends on various factors such as the applicant’s qualification among other things to be considered. But, here is a rough estimate of a typical rate.
- Fixed interest rates 4% – 12.75%
- Repayment terms several months or up to 10 years
- Requirement minimum credit or operating history requirement
Qualifying for an Equipment Loan
As there are different lenders, there will also be a different requirement for getting an equipment loan. Some common requirements are
Personal Credit Score
A business plan comes in handy when applying for an equipment loan. A business plan detailing the nature of your business as well as other useful information about the business. The point of a business plan is to show your lender, the type of business you are into, the number of years in the business, and annual revenue. While some lender does not have a threshold for revenue or number of years, some have a threshold as a minimum standard
Cash Flow Statement
In addition to other stated requirement, a cash flow statement might also be demanded. The point of the statement is to assess the financial strength of the business, to identify how revenue comes into the business and how the expenses leave.
Where to get Equipment Financing
Several options exist for getting equipment financing. It can be obtained from traditional national lenders, these type of lenders often have stricter rules and requirements but have a better rate and terms.
Online lenders are more flexible with their requirements and in return have a higher rate with terms that are not favourable. The type of lender to choose from will be determined by the requirement at hand.
You can get any type of equipment financed, any type of audio-visual equipment can be financed just by finding the right type of finance, there is an equipment financing option to cover equipment and resources for just about every business either small or big. Whatever you need, whatever type of business you run you can always get a form of finance to help you cover the costs.
A Guide to Getting Approved
Depending on the type of equipment to be covered it is quite easy to qualify and apply for equipment financing. For most lenders to qualify for their loans, you need to be in business at least for 12 months, with a constant stream of the annual revenue of at least about $50,000 or more. The credit score and the annual revenue waork hand in hand, a credit score higher than 650 gives higher chances of getting funding for your equipment, but a score lower than 650 with solid proof of revenue can still get you qualified.
And if you do not meet up with any of these requirements, you can still find a lender that will be willing to loan your equipment fund as the requirement differs from lender to lender.
Your equipment loan payments are determined by four major things:
- Loan amount
- Interest rate
- Term
- Collateral
These factors vary widely across industries, workplace and equipment types. That’s why we work with a variety of lenders who specialize in equipment loan to help you in finding the best deal. You can also directly calculate off an online equipment financing calculator.
Choosing an Equipment Loan
It is important to consider some things before getting a loan. You need to find out if you will be having a long-term return on investment by considering the lifespan of the equipment you are financing. Equipment that only gives your work a little upgrade may be lost in value after a few years after you pay off the loan and may not give you the long-term investment that you were looking for.
Factors to look out for when obtaining an equipment loan are:
- Lifecycle management: Your equipment purchase has to be complementary to the loan you are obtaining. The cost of the loan and the repayment plan must match up with the lifecycle of the equipment and must be worth it.
- Greater flexibility: It is always the best option to go for loans or lenders that have more flexibility or lesser requirement for loan service this frees you of much financial burden.
- Lower cost: The best form of loan is usually the type with a lower cost or rate. This prevents the unnecessary accumulation of debt.
Financing Options
Capital Purchase
In this type of financing option, the goal is to own the equipment for the long term. This option provides a fixed payment and ends the lease of the equipment by buying out at a very cheap rate at the end of the term. It is often referred to as the full payout lease.
Operating Lease
For this type of option, payment only covers the operational use of the equipment and not the total ownership of the equipment. At the end of the stipulated term, the equipment is either returned, upgraded or the term of the lease is extended. This is the opposite of a full payout lease as you cannot pay out here.
Audio-Visual-as-a-Service
For this type of service, payment is made for the value of using audio-visual technology and not for its ownership. The payment for the usage of the equipment follows either a monthly or quarterly plan.
Financial benefits of Audio-Visual-as-a-service:
- Cost reduction related to purchasing and managing a piece of hardware
- Working capital is better invested for better performance
- Cash flow can be predicted for easy budget management
- There is the benefit of tax reduction by deducting lease payment as an operating expense.
- Less payment for disposing of materials and other environmental factors.
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