OnPath Credit Union

Equipment and inventory financing can help ensure a business is able to fulfill consumer demands or meet attainable company goals without falling short due to supply shortages or a lack of production capabilities. However, approval for equipment and inventory loans isn’t a sure thing. Whether you’ll successfully receive financing will depend on your business’s credit history, current standing and risk profile as well as the strength of your application.

The commercial loan professionals at OnPath Federal Credit Union can help you find flexible financing solutions and will work with you to increase the likelihood of application success.

Common Reasons Businesses Get Financing

Expansion

Businesses looking to grow their operations may need financing to purchase new equipment, open additional locations or increase inventory to meet new or seasonal demand.

Operational Efficiency

If critical equipment has been outdated or has been damaged, businesses may need financing to get them replaced and maintain operations.

Technology Upgrades

Businesses may need lending to update their technology in order to stay efficient, adhere to regulatory requirements and not fall behind competitors. For businesses in the IT sphere, having the funding to secure the latest technology and ensure you’re up to date is especially crucial.

Seasonal Demand

Some businesses have peak seasons, like the holidays, when supplies can run low. If there’s predictable and dependable demand for their inventory, securing lending to stock up can be crucial.

Cash Flow Management

Businesses may apply for an equipment or inventory loan to safeguard their cash flow during slower periods, ensuring they have sufficient capital left over to cover day-to-day operational costs, payroll, utilities and other essential expenses.

Types of Equipment or Inventory That Commonly Require a Loan

• Heavy Machinery: Critical manufacturing and construction equipment like excavators, forklifts, tractors, etc.
  
  
• Technology and Tools: Equipment like computers, specialized software and other critical technologies.
  
  
• Office Equipment: Computers, printers, furniture, etc., which can be especially important for businesses that are expanding or setting up new locations.
  
  
• Wholesale Stock: Wholesalers may seek financing to acquire bulk inventory and ensure consistent supply to business partners.
  
  
• Restaurant Supplies: Restaurants may need loans to purchase kitchen equipment, commercial ovens, refrigerators, bulk supply of ingredients, furniture, etc.
  
  
• Medical Equipment: Diagnostic machines, treatment devices and other healthcare tools.
  
  
• Fleet Vehicles: Companies with delivery services, logistics or transportation needs often require loans to purchase or lease vehicles like trucks and vans as well as potentially specialized transport equipment.

What Lenders Consider When Deciding on Approval

Creditworthiness: Businesses with higher credit scores are more likely to receive favorable loan terms and interest rates since they’ve demonstrated reliability in repaying debts. Companies with a long track record of success are more likely to be approved. If you’re a newer business or had a rough start, you may not have this luxury. Seeking funding from a more flexible institution like a credit union that prioritizes the person/company more than an impersonal nationwide bank can increase the likelihood of approval.

Financial Statements: Lenders will evaluate your business’s capital status, assessing profit and loss statements, balance sheets and cash flow statements to gauge your financial health and liabilities. Consistent profitability and positive cash flow will boost your chances of approval.

Collateral: Valuable collateral – such as real estate, equipment, inventory or accounts receivable – that shows you have as much at stake with loan repayment as the lender can give the bank or credit union peace of mind. Secured loans are generally easier to obtain and come with lower interest rates because they pose less risk to the lender. Our loan professionals can advise you on your collateral options for a secured loan.

Debt-to-Asset Ratio: Lenders will look at any existing debt your business has and whether you have sufficient capital to repay those in addition to this new loan.

Industry Risk: Banks and credit unions prefer lending to companies in industries with stable or growing markets. High-risk industries subject to rapid changes or intense competition may face more scrutiny and tougher loan terms.

New Orleans Business Depend on Us for Flexible Financing Solutions and Dedicated Customer Service

When you work with thebusiness lending team at OnPath FCU, you can feel confident that you will have help at every step along the way, from pre-approval to closing. Call 504.648.2064 today to learn more about ourbusiness banking services and how we can help your business.