In today's challenging business climate, purchasing a piece of equipment for your business is an important decision that takes consideration and significant preparation. Many businesses start the process by considering what financing options are available, such as receiving financing from a bank or making cash payments. When considering financing today, think about such factors as how long you want to finance a loan, leasing compared to financing and what challenges you may face.
- Grimco hardware customers use our financing partners more than 60% of the time. When interest rates are low, it doesn’t make sense not to finance the purchase. There are many tax advantages to financing equipment.
- Depending on the hardware, most financing on equipment under $10,000 is typically up to a three-year agreement. If the purchase price is in the range of $10,000 to $15,000, it's typically financed up to four years. Anything over $50,000 is between five and seven years.
- Currently, about 90% of Grimco customers choose to finance and 10% lease.
“Historically, equipment in the sign industry was nearly all purchased with a loan or a $1 buyout, but we are seeing a shift to more FMV financing each year. Owners have seen how rapidly technology changes. Many print shops have at least one piece of equipment that is no longer used and it sits in the shop. It ends up being a burden to dispose of, and they had to pay for it in full. Digital printing technology changes often, and FMV or lease financing allows for upgrades more often and the ability to easily make room for new equipment.”
-Greg Bourdon, VP of Small Business Solutions at CIT
What this means for you
When deciding to finance, lenders are looking to see if you’ve been in business with significant activity for a minimum of two years. If you’re a start-up, this can be more challenging. One thing you can expect is a higher rate.
A higher credit score would also be a determining factor. Even the amount of ownership percentage can come into play. You may be in a situation where 100% ownership is required. It’s important to communicate any concerns that might show up on your report upfront. Don’t hide any issues, as they will appear.
During difficult economic times, additional incentives may arise, making financing more attractive. It’s important to be aware of all the programs available to you.
We're here to help
It’s very important to use a lender that's familiar with the industry. At Grimco, our Hardware & Software experts are here to help guide you through the process and answer any questions along the way.