The Advantages of Using Working Capital Loans to Buy Equipment


Having enough working capital to purchase the equipment necessary to successfully compete in your industry is a must for any and every small business. Without this crucial equipment, you may find your small business lagging behind its peers in the market, unable to respond to industry disruptions and quick to lose its customer base. Once your company starts to fall behind the general pace of competition, whether because of a lack of technological upgrades or an inability to pivot to newer machinery, it can be difficult if not impossible to catch up.

Unfortunately, one of the main reasons for owners not buying the most updated equipment or newest technology on the market isn’t because they don’t want to do it, but because they simply don’t have sufficient working capital to make the purchase. Not enough having money to make these acquisitions isn’t just a problem in and of itself, but it can lead to a perpetual downward spiral. The lack of funding means you can’t purchase the equipment you need, which means you end up losing market share to competitors causing sales to slump, all of which can put a dent in the working capital, meaning the purchases are pushed further and further into the future. It can be vicious cycle.

Thankfully, obtaining a working capital loan can be the perfect option for purchasing the equipment necessary to truly take your small business to the next level. There’s a number of advantages to using a working capital loan to buy equipment, such as:

Prepare your business for the unexpected

Having sufficient working capital is paramount for positioning your company to not only compete in a crowded market, but also to be prepared for handling any unexpected turn of events that is not only possibly, but likely, to happen. Equipment is notorious for breaking down or malfunctioning, which can lead to significant downtime. New threats and risks arise every day too. Companies that utilize computers leave themselves vulnerable to viruses and malware that could potentially shut down the entire network.

Having quick and easy access to working capital can provide the funding needed to swap out a sputtering wreck of equipment with a well-oiled machine or replace a swath of computers following a hack or cyber breach.

Sole equipment ownership

One of the ways some small business owners bridge funding deficits is by taking on outside investors, typically private equity firms. While this can provide a capital injection in the company, it also means owners need to relinquish a substantial portion of the ownership to the investors.

Instead of handing over a chunk of your business to outside parties to cover the cost of buying new equipment, a working capital loan lets you retain full ownership of your small business. Other than making the regular payments on time, there are no other obligations or relinquishment ownership.

Collateral isn’t always necessary

Working capital loans can be either secured or unsecured, with many falling under the latter category. An unsecured working capital loan does not require you to put down any collateral to receive funding. Typically businesses with a stellar good credit history and or little to no risk of defaulting will be strong candidates for an unsecured working capital loan. However, even businesses with poor credit history are still eligible for a working capital loan from an alternative lender.

Working capital for all industries

Whether you operate a retail store that needs to purchase new point-of-sale equipment or you run a construction company that has to replace antiquated machinery, a working capital loan is the quick and easy solution you need. Every industry has its own unique obstacles that need to be overcome and requirements that need to be met to find success. And no matter which industry you operate in, chances are you’ll need to have the best equipment possible to remain competitive.

Landscaping companies need lawn mowers, weed whackers and bush trimmers. Farmers need to utilize machinery to plant and harvest their fields, while offices need to have computers, software and other equipment necessary for daily operations like phone systems and copy machines. The cost to buy all of this equipment can be prohibitive for companies that don’t have the necessary working capital.

Quick and flexible application process

Aside from the actual cash injection, perhaps the best part of a working capital loan from an alternative lender is that they’re quick and easy to obtain. With approvals in as quickly as 24 hours, you can obtain a working capital loan overnight. By providing access to this important funding channel without delay, you can get to work on buying the equipment necessary to compete in the business of tomorrow.

Additionally, financing for working capital loans is typically flexible, with interest rates and repayment terms tailored to the needs and capabilities of your small business. Lenders will work with your business to find the best repayment schedule so that terms are not too onerous and payments are not cutting in the budget, both of which would defeat the entire purpose of obtaining a working capital loan.

Tags: , , , ,