While one of the most popular questions about equipment financing centers on the topic of rates, there’s more to a good equipment loan than just the interest rate.
What else should you consider when researching the types of loans that are available? The tips below will help you find the perfect equipment financing solution for your business.

1. How long has the lender been providing loans in your industry?

When markets shift, some banks will open an equipment financing branch and staff it with small business loan officers. Small business lending and equipment financing are very different; make sure you’re working with an experienced equipment finance lender.

2. Does the lender have experience financing the specific type of equipment that you need?

Working with a lender that has experience within your industry or the type of equipment you’re buying can help you avoid surprises. If you need a loan for heavy equipment or heavy equipment parts, work with a lender who has experience in that sector.

3. Is there a minimum credit score requirement?

4. Will they rely on credit scores alone, or do they consider collateral as part of the approval process?

If you choose a specific type of loan, will you still be eligible for future loans if your business grows and needs more equipment?

5. Is there a minimum annual revenue requirement or length of time in business required to qualify for a loan?

6. Not all equipment finance companies will give an equipment loan to a start-up company; be sure to ask about it if you’ve been in business for less than one year.

7. How much paperwork is part of the loan application process? After the loan has finalized, can you make payments via an online portal or through AHS?

8. Are there additional closing and processing fees? What about inspection fees for the equipment?

Fees are part of the lending process; you can expect similar line items to show up on the settlement statement no matter who your lender is. It’s still important to know what these are upfront, especially if you’re getting estimates on a rate that seems too good to be true.

9. Do they finance used equipment, as well as new equipment? Do they offer debt consolidation or working capital loans?

Keeping future needs in mind when selecting your equipment lender can help forge the strong relationships your business needs during good times and bad.

10. Who will be your main point of contact during the application and funding process?

Look for a financing partner rather than simply a lender. A single point of contact can be helpful. And find out who your point of contact will be after funding. You’ll want a personal point of contact should you run into payment issues.

11. Do they offer equipment leasing options, too?

Businesses need equipment to grow, but some cannot purchase it outright or get a loan. Work with a lender who gives you several choices. If you’d like to compare the rate of leasing equipment vs. getting a loan and owning it, can the lender help you make the comparison? Work with a lender who can give you options and several payment scenarios.
Remember, there is no one-size-fits-all equipment loan for businesses. Loans will vary based on industry, the market, location, and the borrower. Think about what’s most important to your business right now and consider your plans for the future. A reputable, experienced lender can help you find answers to these questions during the application process.
Choosing the right loan will also depend on your business’s unique needs, goals, and timeline, as well as how much risk your organization can handle or desire. Don’t forget to ask about funding timelines; how long will it take to get approved, and how long will it take for funding after approval?
As you consider equipment financing options, you may run into terms or phrases that are new to you. Remember, a knowledgeable equipment lender can provide you with multiple financing options, and they can explain the terms and answer your questions. Instead of focusing solely on the interest rate, you should take the time to learn about up-front costs, flexible payment plans during slow seasons, and the type of customer service the company is known for with all of its clients.