Are you thinking of expanding your fleet of vehicles but don’t have quite enough money to do so?
Then maybe you should consider getting a business loan against machinery.
As a business owner, you don’t always have enough money to shell out when you need something for your business. Sometimes, you might even have to apply for a business loan to afford the improvements that your business needs to generate more income.
Let’s say, for example, that you want to buy more vehicles for your business. Maybe your current vehicles aren’t enough to finish all of your tasks, or maybe you want to do more than you already can.
This is where a loan against machinery comes in. You can think of a loan against machinery as setting your own business equipment up your own business equipment as collateral for the loan you’ll be applying for.
Now, you might be thinking that getting a loan against machinery might be too complicated. Getting a business loan against machinery can even look intimidating because you’ll be offering up your own equipment in case you can’t pay back the existing loan.
Most business owners also worry about not having equipment that is worth enough money to use as collateral to get a business loan against machinery under quite flexible and affordable interest rates.
Luckily, getting a business loan against machinery isn’t as hard as it sounds. All you need is to follow the right steps!
Guide to Loaning Against Your Vehicles
Now, you might be thinking that getting a loan against machinery or for working capital loan has drawn out and complicated steps. Thankfully, it isn’t actually that different from applying for any other type of business loan.
However, your own equipment obviously plays a huge part when getting a loan against machinery. Therefore, your attention should be directed towards your equipment first before you get a loan against machinery.
Inspect Your Vehicle
The first step to getting a loan against machinery is making sure to get the most out of your vehicle. You’ve chosen this business loan option because you need money and you have the right equipment to use as collateral, so don’t skip over this step carelessly.
As mentioned before, your vehicle will serve as collateral for your loan. Therefore, its condition will determine how much you will get in this type of loan
You want to make sure that you can get an expert opinion on your equipment’s condition. So, get your equipment inspected first.
This inspection will help you determine your equipment’s value before using it as collateral in a loan against machinery. Typically, equipment financing companies will give you 50%-70% of the value of your equipment in a loan against machinery.
Don’t worry—you won't have to part from your vehicle when loaning against machinery. Your equipment will remain available for you if you still need to use it for your business.
However, this also means you need to make sure that its value as collateral will not go down during the loan against machinery. This is because this can cause further complications in the future, especially if you can’t pay off the loan against machinery.
With this in mind, it is better to loan against machinery that you won't need to use often while you pay off the loan. This doesn’t necessarily mean you should leave the machinery entirely unused for the duration of the loan, though—just not often enough to leave noticeable wear and tear.
Prepare Your Documents
Now, you need to prepare some things to actually apply for a loan against machinery or go ahead with equipment financing.
First, there’s the machinery you plan to use as collateral for the loan. In the case of fleet expansion, you can set the vehicles you already have up for a loan against machinery.
However, having a machine is only part of the process. This means you need to prepare the following documents as they are commonly required for a loan against machinery:
- Original vehicle title.
- Government-issued identification.
- Proof of income or ability to repay.
- Four references.
- Pictures of the vehicle.
Equipment finance companies like Trust Capital also require proof of clear clean titles. This is to ensure that you’re the sole and undisputed owner of the equipment you’ll set up for a loan against machinery and your credit card.
Having this proof can help avoid complications of getting a loan against machinery that isn’t in your ownership.
Partner up with a Leasing Company
Next, you’ll need to find an equipment financing company that can help get you a loan against machinery. You should consider this as another crucial step because you’ll have to negotiate and exchange money with them.
Luckily, most equipment finance companies have programs to suit the needs of business owners looking to get a loan against machinery or even while applying on business loan for women . Companies like Trust Capital can offer financing options for heavy machinery like the following:
- Dump trucks.
- Class 8 over the road trucks.
- Tow trucks.
Now, what you should really be comparing are the advantages of partnering up with a leasing company. Since there are tons of companies able to get you a loan against machinery, you need to find the best one to partner up with for better cash flows.
For starters, companies like Trust Capital have advantages such as these:
- No restrictive covenants.
- Free up equity to invest in your small business.
- Improve cash flow for operating expenses.
- Get the latest revenue-producing equipment or technology you need.
- Extended terms.
- Trade in value.
- Tax advantages within the fiscal year.
- Lower monthly payments than with a business loan.
- Non-debt liability on balance sheet.
Finalize Your Business Loan Terms
Finally, you need to review and finalize your loan against machinery terms that you can check through loan emi calculator.
Your loan terms will depend on the lender or financing company you approached, of course. So, make sure that you have chosen to partner up with a company that has long terms that you can follow.
Companies with flexible equipment loan payments should be at the top of your list. For example, Trust Capital can offer flexible payment plans such as these:
- Seasonally Varied: Matches payment plans to a business's uneven cash flow.
- "Stepped Down" Leases: Payments mirror the declining value of the equipment.
- Fast approvals online application only up to $150,000.00, full financials above $150,000.00.
- *Standard products offer fair market value, 10%, and $1 buyouts and short term up to 60 months.
They also have simple applications online to get you started. Other than that, they actually make it easy for you to focus on using your loan against machinery as capital to grow your transportation fleet.
Final Thoughts on Expanding Your Fleet with a Loan against Machinery
In this blog, I’ve provided a simple step-by-step guide to getting a loan against machinery to expand your fleet of vehicles. Hopefully, this guide can make it easier for you to get the money you need using machinery that you can set up as collateral.
Just remember that your first step is getting your machinery inspected. Doing so can help you get the best price equivalent for it before applying for a loan against machinery.
Next, you need to arrange the proper requirements for your loan against machinery. The equipment finance company of your choice can help you list those documents down.
You should also remember that the company you will partner up with for your loan against machinery will dictate your terms and conditions as well as your payments. Therefore, you should assess your business finances carefully and choose a business finance company that has business loan benefits that suit your business finance needs.
If you need further help with getting a business loan against machinery, you should feel free to contact Trust Capital at (866) 458-4777.