There comes a time in every small business when you have to spend money on new equipment in order to get the next big job, to land the new account, or just to run with the big dogs in your industry. While financing plastics equipment or new construction equipment is not as simple as buying a new car, there are options available to small business owners, even those without established business credit, especially when you are willing to get creative.
1. Bank Loan: If your business has previously established credit with a company credit card, business loan, or even trade lines with suppliers, you can apply for a traditional loan from the bank. If not, you can talk to the loan officer about putting the loan in your name or co-signing for the business. Depending on the amount financed and your overall credit worthiness, the loan could be spread out over several years, which can help stave off any cash flow issues that would arise from paying for the new equipment up front and in full.
2. Invoice Factoring: When small businesses complete work for larger companies, they can have invoices with lengthy due dates of Net 120 or longer, meaning payment will not come for months. Invoice factoring can help with this dilemma. The factoring company 'buys' the invoices from you, at a reduced rate, and then holds them until payment is due. Having those funds earlier can help you buy the new equipment you need now.
3. Merchant Cash Advance: If your business takes credit card payments, you can apply for a merchant cash advance. Basically, the merchant services company that you use for credit card processing gives you a cash advance based on previous credit card sales and is paid back each month using a portion of your future credit card sales.
4. Extended Terms: Talk to the vendor that you plan on purchasing the new equipment from. Ask if they can offer extended terms on the sale. Even if they state that they require payment on delivery, they may be willing to work with you and offer a Net 90 or more in order to close the deal. If they won't extend the terms and normally require a Net 30, ask if you can get a five to ten percent discount for paying up front. It doesn't hurt to ask, right?
5. Industry Financing Services: No matter what industry you are in, there is probably a national association that represents the industry as a whole. Call them and ask if they can recommend an industry financing service. Chances are there is a finance company that strictly works with people in the same line of work as you that will know and understand your growing pains.
6. Friends and Family: While it is never fun to ask family and friends for money, ask. If they understood that this new piece of equipment could help you land a new account or take your business to the next level, they will want to help. Make sure you put everything in writing and have pre-arranged terms for re-payment.
7. Credit Cards: While not always the most fiscally responsible choice, sometimes you just have to charge it. Using company credit cards—or your personal credit card—is a risky choice, but you wouldn't be the first to do it. In fact, Google founders financed its early days by maxing out their credit cards, and look how well that turned out.
There are always options when you are willing to get creative about financing a new piece of equipment. Growing your business has to be your primary goal, especially when you want to prove that you are one of the big dogs. Contact a company that offers plastics equipment financing services to learn more.