It wasn’t too long ago that most companies were just resigned to the fact that items like computer equipment, office equipment, and phone systems were likely going to be paid out of cash or through funds available in the company operating loan.
The challenge was that these types of equipment financing opportunities did not provide any significant security to a lender or leasing company so it was traditionally difficult to secure financing outside of manufacturer related programs.
That’s all changed in the last number of years and now computer equipment financing is a growing part of most equipment financing companies’ portfolio.
From a lender or leasing company point of view, the reasoning here is that most computer equipment purchases are for relatively small amounts, predominantly under $100,00. And if the repayment period is stays within 3 to 5 years, the risk of loss to well established companies is statistically very low even though there isn’t a great deal of security inherit in the assets.
But the other thing that financing companies are trying to take advantage is the repeat business that technology continually creates. So by financing computer assets within a certain comfort zone of the lender and keeping the leasing or loan term short, there is a good chance that the financing will be repeated over and over again in the future as new technology continues to be incorporated into the client’s business.
Unless your company has a limitless source of cash on hand, its likely getting its capital from some form or combination of debt financing sources.
If computer equipment isn’t directly financed, then the money is coming from another source of debt financing available to the business for working capital or other purposes.
When other funds are used for acquiring computer equipment, there automatically is less capital available for everything else, so financing computer equipment directly versus indirectly can have a significant impact on cash flow.
The actual cost of computer equipment financing you are able to secure is going to depend on a number of factors that are unique to your business including the company credit profile and financial profile.
That being said, the actual cost of any source of financing is affordable if application of the capital you free up from computer equipment financing can be redirected into a profit generating or cost saving activity that is greater in value to the company than the cost of the equipment financing for computers, office furniture, and/or phone systems.
In many cases, you can secure computer equipment financing at or near 100% of the acquisition cost providing considerable debt financing leverage to your business.
If you’d like to know more about computer equipment financing and if it would be a fit for your business requirements, please give us a call and we’ll make sure you get all your questions answered right away.
Computer hardware financing is a growing segment of the equipment financing market. Even though the actual asset can offer little in the way of hard security value to the equipment financing companies due to the speed with with technology can go out of date, there is still a tremendous volume of computer hardware going into the market every day. Lets face it, every business now a days requires computers. And with the average purchase price for most businesses being under $50,000, the computer equipment financing process is more focused on existing cash flow of the business and its credit profile than what the computer hardware being acquired is going to be worth in a couple of years.
And even with larger purchases well above $100,000, there are still computer hardware financing options out here. Larger amounts, however, will require stronger balance sheets and established cash flow to offset the risk of loss to the financing company.
Another reason why computer hardware financing is becoming more readily available is that it allows equipment financing to build up a clientele that will come back again and again for more computer equipment purchases in the future as well as other assets the business may require.
In terms of computer equipment financing amounts, an equipment lease or loan can be arranged for a purchase or acquisition as low as $1,500. Equipment loan or leasing facilities can also combine multiple items into one financing facility. And if a small business requires more financing than any one leasing company is prepared to give them, they can also split up their purchasing requirements among leasing or lending companies provided that the borrower or lessee has a strong enough credit profile to support the overall level of depth.
Equipment loans are typically provided through institutions that participate in some sort of government sponsored loan insurance program. Equipment leases can come from a variety of sources, each with their own requirements with respect to credit history, cash flow, and corporate or personal guarantees to the leasing facility.
Equipment leases can also come in the form of an operating equipment lease or capital lease, depending on your cash flow and/or taxation requirements.
If you have any questions regarding computer hardware financing, give us a call and we’ll make sure all your questions get answered.