It’s no secret the benefits of equipment leasing high ticket equipment $50,000 and up. With less upfront money, you can keep your cash flow free for other expenditures.
However, what about small-ticket equipment under $12,000? These type of equipment purchases are considered small-ticket equipment leasing.
If you’ve ever contacted another finance company regarding getting an item under 12k financed, you’ve probably got hung up on. Fast. While we can’t do equipment leasing under $5,000. Anything above that would be considered fair game.
While many equipment finance companies typically can process deals of this size, they just choose not to pursue deals of this size. Many companies feel that pursuing smaller ticket deals would be a waste of effort.
Truthfully, this couldn’t be further from the truth. Even if you choose not to finance with us, we prefer being able to help make a difference to small business owners everywhere.
Common obstacles you’ll encounter
Financing small-ticket items are easier to get qualified for. However, it all comes at a price. Small-ticket financing comes at a higher rate. Since the cost of the equipment is so low, the cost of processing, credit checks, licensing, insurance costs and other factors are more heavily reflected in the monthly payment. Keep in mind, the rates won’t be outrageous for average credit customers. However, those with challenged credit may be more heavily affected and want to seek alternative options.
Small-ticket financing items typically don’t have much negotiation room when you decide to finance them. Another deal requirement is, the equipment has to be purchased from a vendor. We can’t get you the money if you’re purchasing the equipment off eBay or a neighbor.
That being said, you will notice a much faster process leasing lower ticket equipment because there’s less paperwork to fill out. We wouldn’t have to review your financial packet like we would for a $225,000 piece of equipment.
If that doesn’t go over well for you, there are alternative options you can consider as well.
One of the quickest methods would be to apply for a line of credit at your local bank. The biggest setback with doing this, typical terms would require repayment within 12 months. This wouldn’t give you as much cash flow as doing a 4-year term.
Another option is using your credit card to pay for the equipment. It’s not quite ideal, however, if you’re in a pinch and need the equipment. It’s a viable option. You also get the opportunity to purchase private party sales and possibly get a better price on equipment. Another negative is you wouldn’t be building your business line of credit as efficiently as equipment financing would.
(See this useful Entrepreneur article for finding alternative lines of credit)
We recommend small-ticket equipment financing for start-ups as it’ll help establish business credit quickly. While it might not be the best solution for every business, we’re confident we’ll be able to work with you to meet your business needs.
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