A Guide to Equipment Financing: Understanding Lines of Credit

January 5, 2022

If you are a business owner you probably have experienced the feeling of loss when you miss out on buying perfect equipment because your financing was not yet in place. Instead, you are left waiting for answers while your equipment either sits in the warehouse or is bought by your competition. 

Blue Capital’s equipment line of credit eliminates the approval process, so you can get the necessary equipment for your business right away. This way, every time you find your next piece of equipment, we immediately send funds to the vendor. 

What is a line of credit?

A line of credit is a type of loan that lets you borrow money up to a pre-set limit. You apply only once for a credit limit that you can continue to use and re-use based on your credit needs. You are charged interest only on the amount that you use.

It is a flexible way to borrow and can be a great option if you’re looking to add vehicles to your fleet or your business needs new and advanced heavy equipment.

Lines of credit vs. loans 

Financing equipment with a line of credit or an equipment lease line of credit is a great option if you need equipment quickly and with fewer credit requirements. A business line of credit is a revolving credit, a different type of credit than an installment credit. An equipment lease line of credit is a credit withdrawn for an equipment purchase where the lender puts a lien charge against that specific equipment. 

Installment credits are called loans and they are a set amount of money that you borrow and you must pay regular installments on the entire loan amount. But with a line of credit, you only make payments when you draw from the funds, similar to a credit card. 

With a line of credit or an equipment lease line of credit, you have the cash ready when you need to buy equipment. Like a credit card, as you pay back the business line of credit, the money is available to borrow again. The credit line is always there, and, unlike a loan or lease arrangement, you are not required to go through a reapplication process. 

For that reason, many business owners choose to obtain a business line of credit or an equipment lease line of credit before they even need to purchase equipment. This is because the funds are an excellent source for business emergency funds when you need to buy materials, inventory, or make payroll.

Buying equipment with a business line of credit 

Using a business line of credit or an equipment lease line of credit to purchase a piece of equipment for your business is a great option. It especially comes in handy when equipment leasing is not an option. This typically happens with a particular piece of equipment such as custom-made equipment or used equipment. 

As far as the seller is concerned, you are paying cash for the equipment and this can help with negotiations. The Blue Capital team can handle the sale for you so you don’t have to worry about a thing, and instead, stay focused on your business. 

How to get a line of credit for equipment 

Keep in mind that banks will charge you set-up costs and non-utilization fees when obtaining a line of credit. The Blue Capital team will help you manage your multiple finances and become an integral part of your business. 

If you’re ready to make a smart business decision and obtain a line of credit or a lease line of credit for your equipment purchasing, Blue Capital is here to help. We are dedicated to helping other businesses succeed and grow with our professional financial services and equipment financing. 

Click here if you want to get approved today!