5 things you should know about equipment financing
If your business needs new equipment, here’s how an equipment financing loan can help.
Many small businesses rely on costly equipment to manufacture end-products or to provide services to their customers, but buying equipment outright can require a significant cash outlay. Equipment financing can help you acquire the equipment your business needs, in place of an accounts receivable purchase agreement, without putting additional strain on your company’s cashflow. Here are some important things to know about equipment financing and how it could work for your business:
- Benefits of equipment financing
The main benefit of equipment financing is helping you maintain a healthy cashflow by enabling you to purchase equipment without dipping into your cash or working capital. Furthermore, you can apply for equipment financing quickly and easily with DBS, giving you quick access to the equipment you need if you are approved for a loan.
- How equipment financing works
Equipment financing is a type of loan, usually used for the purchase of business-related equipment. This includes food processing or kitchen equipment for F&B businesses; commercial vehicles for delivery businesses; medical equipment for the medical professionals, and many other types of equipment. In general, equipment financing allows businesses to make repayments over a fixed term for the equipment purchased, without having to make a large down payment upfront.
- Loan terms
As with other loan types, loan rates will depend on prevailing market conditions. With DBS Equipment Financing, businesses can borrow up to 90% of the purchase price or valuation of the equipment – whichever is lower – over a loan tenor of up to five years.
- How to qualify
Banks typically look at several items when assessing your loan application. Beyond your company’s financials – including a profit-and-loss statement, cash flow statement and balance sheet – you might need to provide additional documents such as the company directors’ income tax assessment as well as that of your chosen guarantor.
- Applying for equipment financing
Applying for equipment financing is quick and convenient. You can apply online for an equipment loan for an equipment loan with DBS – you can save time on your application by retrieving your personal information from MyInfo Business – and all you need is to have the relevant supporting documents – such as your company’s bank statements and your directors’/guarantors tax returns – handy for submission.
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