How to get funding for your equipment as an SME

Starting a business is a powerful endeavor and with starting a business you will likely need equipment, especially for those in the service industry. Many of these upfront costs can be large and if you are just starting out, it can be a cash flow hog. To maintain cash flows you will likely require financing, but to do so you will need to keep a few items in mind. New businesses, especially SME’s may find it difficult to obtain financing but by having these items in line you will have greater success in obtaining a loan.

Business Plan

First is to have your business plan in place when seeking a loan to fund equipment purchases. As a lender, they are going to want to see items such as the cost of the product, the return on investment, the length of the life on the equipment, and depreciation value.

All of these should already be a part of your business plan but if you are specifically going for equipment funding, you’ll want to ensure those are highlighted in your report. Lenders want to ensure when then lend they are going to receive their investment bank and interest so if you can prove to them your equipment is necessary and prudent, you likely have a strong case.

Credit Score

When attempting to obtain financing for your SME’s equipment, ensure your credit score is clear because if you are just starting out, you want to ensure you are starting off on the right foot. Not only will it increase your chances at obtaining the loan, but you will also likely qualify for a lower interest rate, which helps your bottom line at the end of the day.


Once you’ve solidified your business plan, you can turn to lenders to obtain financing. You can choose traditional lending, which includes your local bank or lender, or alternative options that include online lending or merchant advances. Depending on your situation and current market conditions, you will determine your course of action then.

Each has its benefits and drawback, but these are the methods you will utilize when sourcing your finance options. Alternatives can provide quicker financing options but typically at a higher interest rate. Traditional financing can give you a lower interest rate but be more difficult for an SME as they may lack financial history.


Lastly, if you find that purchasing the equipment to be too cash intensive or not practical, look at the various leasing options available to you. While leasing has the drawback of no ownership, typically with leasing other costs are included such as repair and maintenance because the company that leased the equipment to you will likely get it back and either lease it again or sell it.

This alleviates the need to cash flow a large purchase and gives you the ability to project future cash flows with more accuracy.

These are various ways to go about obtaining funding for your equipment for your new or existing business. Many times, simply getting started will guide you and the right path and if a lender says no, you can simply move on to the next one. With the various options on the market, you will likely find one that fits your needs both from a business perspective and cash flow perspective. Funding is a slow and methodical process and when done correctly, can be a huge asset to your small or medium enterprise.