Like all businesses, startups need a sound strategy for financing their operations. Many startups so not have the high credit scores and financial history to access loans, and if they do,…
Every business uses equipment. It can be said that the success of any business is partly due to having access to the right machines, technology, vehicles, and tools. Periodically, businesses will need to perform equipment upgrades to do jobs more efficiently, which allows for growth. However, equipment upgrades can yield much more than productivity.
To Lease or to Buy?
Many small businesses prefer to lease equipment to avoid a large cash outlay. When making upgrades to equipment, leasing may seem like the less expensive option, but it is not necessarily the fiscally sound choice. Owning equipment adds assets to your business portfolio, and increases your net worth. Equipment upgrades on owned equipment can be performed by selling off or trading in older models for new. What many people do not realize if the equipment upgrades can lead to improved financing options.
Leveraging Equipment Upgrades for Lines of Credit
Owned equipment can be used for asset based lending. Equipment such as machinery, tools, vehicles, servers, and more all have an intrinsic value. Asset based lending uses that value to structure a revolving business line of credit. The line of credit can be used for anything your business needs and is a renewable source of financing. As the line of credit is accessed and the balance is repaid, the total available amount is replenished. Equipment upgrades change the total value of owned assets. When you purchase new and better equipment for your business, an analysis is performed, and the amount of credit available increases. Getting debt-free financing like this is not available is the equipment is leased. Only owned items can be used for asset based lending because leased items belong to someone else.
Building from the Inside
Businesses are moving away from debt-based financing. Loans prevent businesses from growing to their full potential. Asset based lending, by contrast, is debt-free so businesses can preserve their credit ratings. Since the line of credit increases as business acquire more assets and perform equipment upgrades, asset based lending actually encourages and helps businesses to grow.
At CNH Finance, we offer the most comprehensive program for asset based lending. Our team will perform an in-depth analysis of your assets and equipment, often considering items which most traditional lenders overlook. Contact our team today to learn more, and start unlocking the hidden value of your equipment.