When it comes to alternative financing programs, such as equipment financing, every lender sets its terms, guidelines, and qualifying factors. This can make it tricky for small business owners to know what to expect when applying. The specifics always vary from lender to lender, but this guide can give you a good idea of the basics. Learn a few general numbers related to financing, including what loan terms and interest rates to look for.

How Large Are Equipment Loans?

This varies by your business’s annual revenue and industry. That said, it’s not difficult for small businesses to get funding for large-ticket items.

Loans for equipment purchases can be as little as a few thousand dollars or as much as millions of dollars for large-scale manufacturers. Small business owners with construction companies can often acquire funds to purchase heavy machinery such as loaders and backhoes without problems. Transportation equipment loans can help owner-operators and fleet managers purchase semi-trucks and other transports.

The key is demonstrating that your company needs the equipment in question and that it can cover the monthly payments without problems. This is often easier than expected when you look at the increased revenue you can get from using the new equipment.

How Long Are the Terms for Equipment Financing?

Many equipment loans have terms of up to five years. This is shorter than traditional loans, but the qualification requirements are also much more comfortable. In the end, business owners need to analyze their finances to see how much revenue they can generate during the loan period and make sure they have more than enough to cover payments.

It’s good to keep in mind that alternative lenders are your partners in this endeavor, not your enemies. Lenders want to get paid, which means helping you find a loan you can afford and one that helps your business prosper. Often, working together, it’s possible to find terms that are comfortable for your business’s monthly needs and annual goals.

How High Are the Interest Rates?

This is one area where many business owners receive a shock. Many small business owners expect exorbitant interest rates when alternative financing is mentioned, but in reality, equipment loans often provide the same rates that bank loans do. The specifics depend on the U.S. financing market and your company’s credit rating, but rates are often well under 10%.

This is amazing considering that businesses with bad credit can qualify. Traditional loans are generally off-limits for companies that don’t have spotless credit, but equipment financing is more flexible.