Most small business owners understand the way equipment financing works when it’s time to purchase new tools and machines. What many overlook is the opportunity for refinancing equipment they already own when they need working capital. This can fund upgrades and expansions without taking out a fresh loan on the new equipment, or it can take care of ongoing maintenance for your existing equipment so you do not need to tap into cash reserves to make repairs. There are two ways to use the equipment you own outright for capital. One of them is debt-based, and the other involves selling the equipment and leasing it back.
Refinancing Equipment with a Loan
Equipment financing works a lot like property financing, in that the value of the purchase serves as the collateral for a loan. That is why you can’t get more than the purchase value of your equipment out of a loan when you buy. In fact, it’s why you usually need a down payment. Just as you can refinance real estate to access the equity in it as working capital, you can do the same thing with equipment.
Most of the time, refinancing equipment involves pooling a few assets. Their value is based on the expected useful operating life remaining and their original values, and the LTV is lower than purchase loans. That being said, if you need money now, it is a way to access the capital you would otherwise be sitting on.
Using a Leaseback to Sell Equipment You’re Still Using
Another equipment financing option is the leaseback. This has a few advantages over refinancing with a loan when it is used under the right circumstances. If you are selling to someone looking to lease that equipment for investment income and you are also leasing it, you have a lot of negotiating power when it comes to costs and term lengths for the lease.
The best part is at the end of the lease. Having sold the equipment for working capital, all you need to do is let the lease expire and the investor will take care of its removal. That frees up floor space for your next equipment upgrade while saving you equipment disposal costs.
Why Use Equipment Financing for Working Capital?
There are a lot of ways to get access to capital when you need it, but financing your equipment is a way that helps you control your costs. Whether you choose a loan or a leaseback, the cost of capital is mitigated by the lowered risk that your assets’ values represent.
Starting a new business is a challenging process with many hurdles to cross. Many founders give up on their businesses before they even get off the ground because they don’t have a clear plan from the outset. To avoid this fate and increase your chance of success, here are some useful guidelines that can help you start your small business.
Do Market Research
You have to fully understand the market in which you plan to operate. Running market research at the beginning of your startup journey will help you gather all the data necessary for your business plan and give you a better idea of what your clients are looking for. You can choose between online surveys and focus groups, in-depth interviews, and even one-on-one surveys. Whichever method you choose, remember to gather as much data as possible to avoid overselling your product or service.
Create a Business Plan
After you’ve done your market research, you can move on to creating a business plan. This document will help you organize and prioritize your ideas and give you a clear vision of where you want to take your business. Your business plan should include information about your business model, your target audience, your unique selling proposition, your marketing strategy, and your financial projections. Your business plan doesn’t have to be long, but it should be clear and concise.
Hire the Right Team
An important part of starting a new business is finding the right people to work with you. If you’ve been an entrepreneur for a long time, you probably know that many tasks, such as marketing and sales, are best done by individuals with specific skills and expertise. If you’re not good at these tasks, hiring professionals in these areas will not only save you time but also allow you to focus on the core elements of your business. As an example, you might decide to hire a social media marketing agency to handle your marketing campaigns.
Launching a small business is a daunting task, and it’s important to keep up your spirits throughout the process. To avoid getting bogged down with unnecessary stress and pressure, you should do everything in your power to keep your expectations realistic. Sure, you want to achieve greatness with your company, but you must not forget that every journey begins with a single step. Keep these things in mind and you’ll have a much better chance at success.
Small businesses that require additional working capital have several options to get the financing they need. One option available to small businesses that make credit card sales is a cash advance.
Research Your Options
Before submitting any applications, do some homework and compare different cash advance companies. There are some simple things to consider when looking at different merchant cash advance companies.
Start by understanding the advance’s cost and the factor rate. When you have this information, you have a much better idea of determining the portion of your credit card sales you can utilize for your advance.
Find an Approved Credit Card Processor
If you already have a credit card processing company, ask them if they have any relationships with merchant funding companies. If you want to choose a specific business cash advance provider on your own, you can always switch credit card processing companies if needed.
Submit Your Application
A very nice feature of a cash advance is that the application process is far more straightforward than applying for a traditional bank loan. Companies with organized and accurate financial records will find applying for a merchant cash advance relatively easy.
Cash advance providers will want to look at your current business financial situation. This inspection can include your total income, the typical amount of credit card transactions, and any future performance projections.
Providers will also want to know information about your company’s structure and overall financial history. In some cases, a provider may also review your business’s credit score.
Take a Look at the Contract
Once you receive your financing approval, the cash advance provider will send you a financing contract. Any business owner needs to review these contracts in detail.
Pay close attention to the amount you will need to remit regularly. Also, take note of any penalties that may occur if you default on the requirements of a lender.
Make sure that if you have any questions or are unclear about any of the terms or conditions, you ask your provider for clarification. Your provider most certainly wants to make sure that you understand all the terms of your contract before signing up for an advance.
One of the best elements of a cash advance for a merchant is the simplicity of receiving this type of financing. Small businesses in need of quick capital should most certainly take advantage of this specific type of financing vehicle.
These days, it takes more than just a simple billboard to get attention for your company. With the advent of online advertising and the greatly accelerated amount of competition on the internet, turning to social media influencers is a vital marketing tactic. Here are a few key reasons why influencer marketing can be highly lucrative for your business growth, and what each influencer can bring to the table in terms of advertising for your company.
Your Business Needs an Audience, and an Influencer Brings Followers
There’s no denying that the real power behind social media stars is their presence with their followers. Every influencer has, to some degree, learned how to master his or her marketability and attract followers to his or her social pages. If they’ve built up a platform that speaks to thousands or even millions of people around the world, they have plenty of opportunities to share and promote advertisements for your business that can reach all of those customers in one fell swoop.
Customer Loyalty is Essential, and an Influencer Can Maintain That Relationship
Influencers gain their popularity on social media not only by being famous or going viral in some way that has attracted a large audience but by holding onto and maintaining relationships with their followers based upon what they do. Whether they’re looking to sell their product, promote a certain lifestyle or simply share aspects of their daily lives that their followers can relate to and connect with, these individuals have gained the trust and loyalty of their audience through their brand — and brand loyalty is an essential component of your own company’s success. Hiring an influencer to highlight your company’s name and product as a marketing tool can be highly effective in retaining that same loyal audience for your own business for years to come.
Content is Still King, and an Influencer Can Easily Offer It
The driving force behind any marketing strategy, especially on social media, is to consistently engage customers by putting out informative or useful content. Content can be anything from blog posts to infographics to create video posts, and those in an influencer position can easily share and market your company’s content, as well as produce their own.
Relying on social media influencers as part of your marketing platform is a smart and productive avenue for your company’s growth. Remembering these possibilities when it comes time to prepare a new advertising strategy can be a worthwhile endeavor for long-lasting success.
Applying for a loan can be a lot of work for small business owners. Good preparation will help you navigate the process strategically and present your business as a strong strong applicant to lenders. Familiarize yourself with some of the qualities that they’re looking for and what you’ll need to do to make a winning impression. Here are some key tips and tactics for getting a small business loan.
Know Where Your Credit Score Stands Before You Apply
Lending institutions look at creditworthiness as one of a business’ important qualities. Your credit score is a bright line representation of your company’s ability to meet its ongoing obligation to creditors and manage finances well. For many lenders, a problematic credit report and score may make even considering an SBA loan application a nonstarter.
Make it a point to check in on your business’ score and activity on your credit report on a regular basis. If you check your score regularly, you’ll be able to address mistakes instead of learning about them when a loan application or another credit inquiry is already underway.
Time Your Application Strategically
Businesses that haven’t been operating very long may have a tough time inspiring confidence in loan providers. New enterprises are a high-risk proposition for creditors because so many newly formed businesses encounter financial struggles in their early days. Getting through your growing pains before you try for an SBA loan may be a wise course of action. In general these types of lending opportunities are best suited for businesses that have already realized some initial success and need a loan to fuel growth instead of startup costs.
The steps that you take to afford your overhead costs can help you demonstrate your creditworthiness to prospective lenders. Making consistent payments on business credit cards, using a line of credit responsibly, or factoring receivables can show your company’s mettle in managing finances.
Organize Your Financial Information
When you apply for an SBA loan, you should have detailed financial statements on hand. Being able to prevent a comprehensive financial picture of all of your revenue and expenses in real time is essential when you’re trying to get an application through. With all of your financial data ready, you’ll be able to answer lenders’ questions completely and accurately.
The turnaround time for a small business loan approval can vary between lenders, but you should expect that it will be more than a few weeks. The process may take months. Be patient, be persistent, and stay organized to improve your chances of getting an approval.