Obtaining equipment is one of the most common reasons small business owners seek outside financing. Everything from computers and desks for an office to farm equipment and heavy machinery can be acquired without shelling out the full price up-front.
Equipment purchasing is an essential need for business in Singapore. Circumstances of your business will reveal more about it, either you should apply for an equipment lease or not. The first thing to keep in mind is a qualification for the loan. Certain requirements need to be fulfilled before applying for it. Lenders have different conditions and you should know if they are suitable for you or not.
Why you need equipment financing?
Equipment financing in Singapore is mainly used to purchase hard assets. It is more like an investment for the resources for the firm. This type of financing is used to purchase any physical assets. It can a company car, furniture or anything required for a business.
Businesses commonly get equipment financing in these situations:
- You require expensive business, but can’t afford to secure that equipment forthright,
- You need to swap your equipment often because it has a short duration or you always need the latest in technology and the list goes on.
- Or in last, you might need the combination of both mentioned above.
The main question is: Is equipment financing right for your business?
If your business is in a situation similar to any of the manufacturing, technology firm, seller’s organization, the answer might be yes. But there are a couple of different ways you can apply or qualify for the loan.
Considerations for the Loan
You can go for the option of lease too. However, the approach can be of your choice. But you need to consider a few things before applying for it.
- Down payment
Lenders and banks have different down payment rates. Well, in the same market, you might find it much different. Mostly you will be asked for a 20% down payment. The question you should be asking for yourself is that either you can afford it or not? You can’t just go and apply for it. This is one of the important factors to consider.
- Each installment
How much of every month you can pay? It depends on your total income. A small business might hesitate for such commitments. They don’t have enough income on a usual day to be very sure of making commitments. However, large business organizations have other crucial factors to see. So, you need to decide that you can pay enough installment or not. More repayments can result in higher interest.
- Duration of the equipment
The general rule of thumb is that if you need the equipment for more than three years, purchasing—through your own funds or a loan—is a better option. While both loans and leases offer the option of owning the equipment at some point, loans tend to be less expensive.
So, you have all the information. Now, consider all the essential factors before applying for it. There are landers in Singapore that offers some of the best conditions for Equipment Financing.