How Private Financing Is Revolutionizing Equipment & Software Purchasing
As we enter the second decade of the twenty-first century, our technology and machinery have progressed with an unprecedented degree of innovation. The capabilities and possibilities enabled by these innovations are quite literally endless. Almost all major businesses in the world utilize technology in one way or another and the demand for specialized equipment like robots and software is at an all-time high.
While the presence of this demand and interest is a good thing, the cost of admission continues to be a problem for both equipment purchasing partners and companies alike. There are workarounds to the problem, mainly bank loans and leasing, that lessen the burden but it’s not necessarily the best solution. But thankfully, there is another option that many purchasers are taking advantage of that you might not have considered.
In this article, we’ll tell you why privately financing your next equipment or software purchase through a third-party vendor could be the best overall choice for you and your business.
The Costs of Equipment Purchasing
You’ve probably understood already that equipment and software aren’t cheap. Especially the more specialized examples. This varies according to the equipment type and function of course but for the most part, it’s a serious financial decision to make. And also, a potentially beneficial one. The benefits of upgrading your equipment or using new production processes are huge and would require an entirely separate article to go in-depth into. The short version of all the benefits you gain access to include:
- More productive capacity
- Better pricing structures
- Improved worker safety
- More consistent work output
- Higher quality work output
- Potential to reach more customers
- Ability to expand operations in more than one location
Bank Financing of Equipment & Software
Now let’s move onto financing your purchase through a bank. We’ll assume that you’re buying instead of renting the equipment or software in question. Renting isn’t a bad option by any means but as the instances of its usefulness are niche in nature, we’ll stick to the more orthodox approach of buying equipment outright.
Bank loans are the conventionally popular choice and there are certainly advantages to this approach. For one thing, banks can loan a very large amount of money if required. For another, if you already have a good relationship with your bank and have been in business for a considerable amount of time, then acquiring the loan will be much easier.
Bank loans have problems that many people don’t think about before making this important decision, however. Here are some of them in a little more detail:
- Getting the Loan Itself. As we’ve already mentioned, getting a loan as an established business is easy but getting one as a new startup is almost impossible. Banks will very rarely trust newcomers with a huge amount of capital without a proven track record and it’s a classic catch 22. This is a big reason why bank loans are an inefficient choice for small business owners.
- Assets Taken As Security. Another procedure in the loan approval process is agreeing to let the bank use assets of yours as security. The bank does this to ensure it doesn’t suffer a loss in case you don’t end up paying it back. Whatever the reason, it lessens your standing and negatively affects your company’s equity.
- Only Equipment Is Financed. One thing buyers tend to forget is that there are many hidden costs associated with buying a piece of equipment or software. Delivery, setup, maintenance, training, troubleshooting, etc. All these processes come at a price and the bank will not assist you in handling them.
- Uncertain Monthly Payments. Banks operate based on interest rates which fluctuate and change with the economic health of the country. Because of this, monthly payments are very rarely steady and can vary on a month-to-month basis. This makes financial planning a challenge and can hinder your yearly budgeting and profit forecasting.
- Long Application Process. This might seem like a nitpick, but it’s an inconvenience, to say the least. Banks have very long application procedures and the waiting periods between appointments and approvals can either be a couple of weeks or a couple of months. Besides being a waste of your valuable time, it’s not a good option for people looking for a quick solution to a problem. So, unless you’re prepared to wait a while for your equipment purchase, bank loans might not be your best bet.
The Private Vendor Financing Solution
On the opposite end of the spectrum, private financing offers a much easier and more efficient purchasing opportunity for both small and large businesses alike. Companies like Dimension Funding are leading the charge in providing an easy, safe, and economically viable option for vendors and private customers alike.
The main advantages of private financing include:
- Fixed Monthly Payments. Unlike banks that put you at the mercy of fluctuating interest rates, private financing lets you choose a low monthly payment for up to 60 months. This helps you plan out your finances better and keeps surprises at bay. You know exactly how much you’re paying each and every month. This amount is agreed upon during the sign-up process.
- Up to $250k Without Financial Documents. You can finance equipment worth up to $250k through an “application only” option. This is in stark contrast to banks that have lengthy application processes as well as hefty documentation requirements. If the equipment you’re looking to finance is more than $250k then you just have to provide your financial statements.
- Finance 100% of the Costs. As we’ve already mentioned, banks only finance the equipment itself. On the other hand, private financing companies like Dimension Funding finance everything for you. This includes all associated costs like maintenance, delivery, setup, etc. You don’t have to worry about unexpected expenses arising as everything is taken care of and included in your principal.
Because of these reasons, private financing has helped thousands of businesses and individuals finance their equipment and software upgrades quickly and easily. We hope this article helped explain the reasons behind this rise in popularity and gave you ideas for your own business and workflow.
If you’re interested in financing your equipment or software purchase through a third-party vendor, be sure to contact Dimension Funding. You’re only an online application and a quick approval process away from getting a time-tested, hassle-free, and convenient financing option for your next equipment upgrade.
- 4 Improvements That Will Modernize the HR Software Industry August 5, 2021
- The Best Way to Finance External Power Sources July 29, 2021
- Everything You Need to Know about Buying Commercial Vehicles Under IRS Section 179 in 2021 June 30, 2021
- Finance Software Training & Implementation Costs June 21, 2021
- Current State of Equipment & Software Industry After COVID 19 June 3, 2021