Understanding the Lifecycle of Equipment Financing

You know you need equipment to run and grow your business. You also know you don’t want to or can’t fund a big outlay of capital to obtain that essential business equipment. Sounds like a catch-22, right? Not necessarily. This is where equipment financing comes into play. Being approved for equipment financing allows you to get the equipment you need for a thriving business without depleting or tying up your cash reserves. 

The process of financing equipment isn’t cut and dry, especially if you’ve struggled with credit approval in the past due to any number of reasons. If this sounds familiar, you’re not out of equipment financing options. While traditional lending institutions may reject your application, alternative or direct lenders can often approve your equipment financing. When you better understand the lifecycle of an equipment financing deal, you’re better positioned to make informed decisions and navigate the process smoothly. Here’s a closer look at the seven stages involved, from your initial application to the final repayment. 

1. Initial Inquiry and Assessment

The lifecycle begins as soon as you identify the need for new equipment. This could be anything from construction machinery to medical equipment. At this point, you reach out to a lending consultant, like SB Finance, to explore your options. What sets SB Finance apart is our ability to tailor solutions specifically to your needs. Our team looks at each application uniquely. We focus on your ability to service your current and proposed debt rather than just your credit score—in other words, “your story. The goal here is to understand your business's needs and your financial situation to offer the most suitable financing options.

2. Equipment Financing Application and Documentation

Once the preliminary assessment is complete, the next step is filling out an equipment financing application. SB Finance has access to over 700 lenders, which means more flexibility and quicker decisions compared to traditional lenders and big banks. You will need to provide documentation that supports your ability to repay the financing request, such as financial statements, tax returns and details about the equipment being financed.

This stage also involves discussing the financing terms, including interest rates, repayment schedules and any collateral requirements. Since SB Finance supplies fast, flexible equipment financing to non-investment grade companies, we are often able to finance business owners who might not qualify for traditional financing requests.

3. Credit Review and Approval

The approval process is where you’ll notice SB Finance is truly different from other lenders Instead of relying heavily on credit scores, the approval is based primarily on your ability to service your current and proposed debt. This approach is a miracle for business owners who have strong cash flow but may not have stellar credit.

As a nationwide lending consultant, SB Finance has the expertise to assess a wide range of industries and business models. The credit review process is handled quickly because you’re working directly with our decision-makers, meaning you get the equipment you need, if approved, without waiting weeks or months.

4. Agreement and Funding

Once approved, the financing agreement is drawn up. This document outlines all the terms and conditions, including the financing amount, interest rate, payment schedule and any specific covenants or requirements. At this point, you review the agreement and ask any questions you might have.

After the agreement is signed, the funds are disbursed quickly.

5. Equipment Acquisition and Implementation

With the funds approved and available, you’re free to lease or purchase your new or pre-owned essential business equipment. This stage involves working with the equipment vendor and ensuring that the purchase aligns with the financing terms. Once the equipment is acquired, it’s put into operation, and you can start to benefit from the new asset, from accepting to contracts, expanding your services or offering new services and/or products.

6. Repayment and Relationship Management

The final stage in the lifecycle of equipment financing is repayment. Repayments are made according to the agreed-upon schedule. SB Finance’s flexible repayment options are designed to fit the cash flow patterns of the business, ensuring that repayments are manageable. The phrase, “Your success is our success” is never truer than in a financing relationship.

Throughout the repayment period, SB Finance continues to maintain a relationship you. Communication is the best way to handle any hiccups and adjustments if your business’s circumstances change and provides opportunities for additional financing as your business grows.

7. Term Maturity and Renewal Options

As the equipment financing agreement approaches its contractual term, you have several options. Either pay off the remaining balance, refinance the equipment or explore additional financing for new equipment needs. SB Finance’s role as a full-service lending consultant means we can offer various options, tailored to your evolving needs.

Renewal options are particularly beneficial if you’re in an industry where you need to continuously upgrade equipment to stay competitive. By refinancing or entering into new agreements, you always have access to the latest technology without straining your capital reserves.