Equipment Financing Mistakes | Huntington Coast Capital

Equipment Financing Mistakes | Huntington Coast Capital



Regardless of size and sector, businesses at some point will need equipment financing to expand operations and/or improve efficiencies. However, this requirement can often come with a high price tag.


Luckily, you can access financing through an equipment loan if you don’t have enough funds to buy the equipment. This financing lowers your initial expense, which is helpful, especially when starting a business. Furthermore, equipment financing allows you to acquire the equipment fast, any many programs come with maintenance options to handle unexpected equipment breakdowns or failures.


However, the impact of your decision to take out an equipment loan will depend on how you manage and use it. To ensure that the loan benefits your business in the long run, here are some mistakes to avoid while financing equipment.


Failure to Set a Budget

Setting a budget can help you determine how much you can afford to borrow and what you need the loan for. As tempting as it may be to acquire a particular piece of equipment, you must consider whether you can comfortably repay the loan.

First, establish how much you can raise as a down payment. Then, consider how much you will pay each month and over the loan term.

You can easily set a budget by considering how much the equipment will earn for your business. Evaluate the expected income, and if it exceeds the loan repayment cost, you can proceed with the loan.


Failure to Plan

Don’t just borrow a loan for the sake of it. You must plan how to use the loan and repay it. Ensure that you develop an achievable repayment plan before taking out the loan.

Before you conclude that you need the loan, consider if your business would function without it. Could you work with your current equipment for a while longer? Can you make minimal adjustments or repairs to keep it functioning? Otherwise, you will likely make huge financial mistakes that will take time to recover.


Failure to Set Realistic Expectations

Numerous aspects determine if you qualify for an equipment loan, and if you do qualify, understand how much you can borrow and on what terms. The lender will consider your creditworthiness and income factors when determining whether to issue the loan and what restrictions they will place.

Therefore, take your time to assess where your business stands, so you will know how much you can borrow and pay. Don’t overestimate the amount of money available or what your business can manage; set realistic expectations to avoid over-borrowing.


Failure to Explore Different Options

Some business owners assume that banks are the only source of equipment loans, but that’s not true. You have the option to choose where to source your financing, and equipment financing offered by credit unions, finance companies, and equipment dealers, may suit your business’s needs.

Take your time to research and explore different options. By doing so, you will likely secure equipment financing that meets your payment terms, interest rates, and document fees.


Failure to Consult an Expert

You may be excited about qualifying for the equipment loan, but you should consult an expert before committing to the loan. You need the right partner and adviser to guide you on the best financing option for your business.

An expert will assess your income, creditworthiness, and other factors before recommending the best financing option. The adviser will also offer a financing proposal that best fits the needs of your business.

By avoiding these common mistakes, you can ensure you have a successful borrowing experience. Explore, research, and consult an expert to ensure you get the best terms for your equipment loan. With the right strategy, you can ensure the loan works for your business.


You can trust us at Huntington Coast Capital to help you secure the best equipment financing terms. We are a capital market advisory firm offering equipment loan options and solutions to help businesses grow. Contact us for a consultation or call us at 844-239-2632.