The outbreak of the COVID-19 virus posed an unprecedented, major challenge to the economies as well as societies. As a result, the global economy essentially faced one of its biggest dangers since the financial crisis.
Containing the epidemic and protecting people was the world’s top priority at the time. However, all of this ultimately resulted in a sharp decline in business investment, followed by a significant rebound.
Investments plummeted during the pandemic outbreak, and firms struggled to cover working capital in their day-to-day operational activities—all of this delayed strategic investment objectives when the economies collapsed.
Business Recovery
Every construction project will have a perfect set of machinery that has been pre-selected and is predicted to get the job done. However, getting the right equipment for each project can aid with efficiency, safety, and build quality.
Due to this, it is essential to be on the same page when it comes to choosing equipment with the entire team because some machines have multiple uses, while others are single-task-specific machines.
After the COVID-19 outbreak, businesses have been struggling to get the right equipment to get the job done. Today, we will be looking at how contracting equipment can help businesses with a recovering COVID economy and disaster areas.
Contracting Equipment to Help Out Businesses
After the economic collapse within disaster areas, the only thing that is now standing in the way of a company reaching a higher level of success is crucial parts of equipment. Businesses such as these cannot scale without the right equipment, and because it is now more difficult than ever to get financing, many businesses lack the capital to purchase the required equipment. However, contracting equipment, or in other words, equipment financing or leasing, can aid in this. Coastal Kapital has the experience as well as knowledge to help these struggling businesses and connect them with loans that they can manage and gain the equipment they need at the point in time when they need it.
As these businesses plan for growth, equipment financing or leasing can play a crucial role in the growth. Rather than draining their savings, they can take on payments that fit into their monthly budget.
This essentially means that any business that relies on costly equipment can benefit from this financing. Some of the most common industries that need to contract equipment include construction, excavation, utility companies, short-haul trucking companies as well as health and beauty companies.
What companies need to do is essentially select the equipment they need, after which they are provided with the opportunity to apply for financing. They can then make payments until the loan is paid off. At the point in time when the last payment has been made, these companies have full ownership of the equipment.
There are numerous options that can be taken into consideration here, including making the equipment serve as collateral, where if the company defaults, the lender assumes ownership, or through a personal guarantee, or with a blanket lien on the business, including the payment.
It is important to understand what each company agrees to at the point in time when they sign off on a loan. A lender that is typically upfront about all of this, including the terms and risks, should be the right pick; those who hide this information from the companies should be avoided.
Should you Finance or Lease Equipment?
Small business owners can essentially take out loans and use this new cash to purchase the equipment that they need. They can also finance the equipment directly, where the lender will typically take multiple factors into consideration and help you decide which type of financing you need.
At the point in time when someone aims to gain equipment financing, they want a loan to get the equipment. This requires a down payment, and collateral will need to be put up for the loan. However, the collateral can be limited to the equipment, and the lender can sometimes be required to agree to a personal or business lien on other assets. The repayment periods are generous, however, and can range starting from a few years to over 10 years. Each business will pay interest based on factors such as the credit score, the financial climate, and how much has been borrowed, alongside the length of the overall loan.
At the point in time when you end up leasing equipment, you are borrowing it from an owner for a predefined period of time. This way, depending on the lease, whenever you make the last payment, you can review new terms, choose new equipment, or directly buy the equipment.
There are multiple reasons why businesses might be interested in leasing instead of straight-up buying this equipment. This has to do with the speed at which they can gain it, alongside the difficulty surrounding the process, as it can be a lot easier in a majority of cases to lease the equipment.
However, as always, it is recommended to consider the overall costs associated with different products, such as construction equipment financing as well as construction equipment leasing.
Coastal Kapital can help you decide if leasing or financing is the perfect option for your specific use cases. To begin your loan processing, you need to contact the team at info@coastalkapital.com or fill in the application form here. You can even get a business loan with low credit with Coastal Kapital.