Getting access to financing is a crucial aspect of running a small business. Every company encounters occasional fluctuations in cash flow. Customers may be slow to pay their bills, unexpected expenses can arise, or the business is seasonal with sales that ebb and flow.
When business owners experience lags between cash coming in and cash going out, they can use collateral to obtain the necessary funds to meet expenses such as paying employees and purchasing raw materials. Equipment and machinery is often the largest asset for many small businesses, which can leverage the value in their long-term investment to support short-term cash flow needs.
Flexible Financing Options for Growing Businesses
Lenders like Summit Financial Resources provide working capital financing that gives small businesses like yours the flexibility to keep your company growing. We offer a variety of financing options for situations where a traditional loan may be undesirable or unattainable. Financing can take the form of factoring, asset-based loans, inventory lending, or equipment term loans for companies with qualifying assets that can be used as collateral.
Fixed and liquid assets are typically eligible collateral for asset-based lending. A liquid asset, such as inventory or outstanding customer invoices, often changes in quantity or value. Fixed assets like heavy machinery retain value for a longer period of time.
Summit Financial Resources requires tangible assets as collateral, including product inventory and high-quality balance sheet items such as machinery and equipment. Our programs empower companies ranging from manufacturers and wholesale distributors to professional services firms to maximize the value of their assets to help fund fluctuations in cash flow or take advantage of immediate business opportunities.
Equipment Term Loans Provide Additional Working Capital
Summit Financial Resources views your equipment as an asset we can loan against. As an add-on product to an asset-based loan or invoice factoring program, an equipment term loan can augment your existing working capital line of credit. By combining both products, you can use your company’s assets to help ensure a steady stream of cash flow into your small business. The additional funds can be applied to any expense, from financing day-to-day operations and maintaining or upgrading your equipment to purchasing extra inventory in order to meet demand and stay competitive.
Our term loan amortization is up to 36 months, allowing you to finance your short-term needs and make the investments necessary to help your business thrive. Any equipment you use to run your business may be used as collateral, from heavy machinery, manufacturing and printing equipment to drill presses and precision hand tools. While an individual item may not be worth much on its own, collectively the value adds up.
When deciding whether or not to take a term loan, make sure it won’t compromise your ability to manage existing debt. Understand the terms, and consider the consequences if you are unable to meet your obligation. Think strategically about the equipment you are considering as collateral, keeping in mind that, in the event you are unable to repay the loan, the lender will take the equipment. If this will seriously hamper your ability to operate or worse, put you out of business, it may not be a risk worth taking.
A Big Tax Break for Small Businesses
If you have been thinking about upgrading or purchasing new equipment, it may be to your advantage to do so before the end of the year. Section 179 is a tax code that makes purchasing equipment more affordable for small businesses by allowing you to deduct up to $1 million a year in qualifying purchases from your taxable income.
Companies that spend less than $2.5 million on qualifying business equipment purchases are eligible for this tax break, which lets you deduct the value of equipment you buy or finance and put into use in a single tax year. Because Section 179 is designed to support small businesses, most of the equipment you will purchase, finance, or lease qualifies for the deduction. The equipment must be purchased and put into use between January 1 and December 31 of the tax year you are claiming.
It takes cash to help grow your business, and having adequate working capital on hand is critical to ensuring sufficient cash flow. If using your equipment to secure funding for your business is a viable option, we may be able to help. Ask us about increasing your cash flow by adding a term loan to your core line of credit. Our approach to financing allows us to look beyond your company’s current circumstances and leverage the value of your investments to help expand your company’s potential.
Working Capital Financing is a few clicks away.
Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.