How Does Manufacturing Equipment Financing Work?

Manufacturing companies have a tremendous amount of flexibility regarding their finance structures and what they can finance in the current market.

The manufacturing industries are continually progressing, and manufacturing equipment is constantly in demand. Equipment loans can come from a variety of sources depending upon your credit worthiness and the type of the equipment being purchased. These sources could include:

• Commercial banks
• Credit unions
• Online lenders
• Equipment financiers

Terms for equipment loans vary depending upon the individual lender. Commercial loan repayment terms tend to max out at seven years for most loans with interest rates that will also vary depending upon the lender, your credit profile, and the amount borrower. While loan terms will differ, depending upon the lender, most traditional lenders will ask for a down payment, likely 20 percent of the loan upfront. In most cases interest paid on equipment loans and financing is tax deductible.   

Today’s manufacturing companies have many options when it comes to financing equipment. In addition to the availability of financing, these firms are benefiting from an increasingly competitive lending environment. 

For example, manufacturing companies with good credit can secure 100% financing with terms up to seven years. In addition, interest rates have never been lower, and many finance companies are offering rates in the 3% range with nothing more than the equipment as collateral.

Here are some of the most common financing sources today: 

Commercial Banks & Credit Unions

Depending upon the nature of the equipment, the equipment itself can sometimes be used for collateralizing the loan. And, depending upon the type and cost of the equipment being purchased, equipment loans can sometimes be for smaller amounts than a typical bank loan, which could make traditional financing an option for qualified small business borrowers.

Online Lenders

Online lenders also offer financing that is suited to purchasing equipment, and just like what is described above for traditional lenders, rates and terms will vary depending on the individual lender you choose. Although interest rates could be higher, a quick response is a hallmark of online lenders - often responding to a loan application within an hour and depositing funds in your business bank account within a day or two. Sometimes as quickly as within 24 hours.

Equipment Financiers

If manufacturing companies work with an experienced financier, the number of finance options available are simply expansive. Manufacturing companies can secure both operating and capital leases and can work with their equipment finance expert to create a financing solution that perfectly suits the needs of their business. 

For example, in today’s market, nearly every aspect of acquiring new equipment is financeable, from the equipment itself, to installation costs, to freight. Many finance companies will even cover soft costs and will work with vendors to pay off vendor costs up front, ensuring that each piece of equipment is delivered and installed on time.

Maratek’s Equipment Financing

Maratek is able to offer a variety of financing, leasing, rental and payment options depending on the type of equipment being considered and the customer’s credit history. These options include short and long term leasing or financing, annual rental plans and delayed payment terms. 

Please contact a Maratek sales agent today to see what options can be offered for your equipment needs.