Business financing for inventory and machines
Financing assets is something that often happens. Every company has different needs. For example, one company has a lot of inventory or machines on the balance, and the other does not. A company that is more capital-intensive, or that needs more inventory or machines, often can not pay all of this out of their own pocket and is therefore dependent on a business loan.
A business credit for inventory
Every company has an inventory on the balance sheet. Think for example of a laptop. Sometimes you can finance this from your own cash flow, but if it concerns larger amounts, it often requires a loan from an external financier. There are different ways of financing inventory, for example with a long-term loan from a bank or through a lease solution. When it comes to inventory with a lower value, leasing is often not a solution. There are also providers of inventory such as expensive computers, servers or other things that offer the possibility of financing, actually a sort of purchase on payment. Pay particular attention to interest costs and other financial charges. The costs here are sometimes higher than with a long-term loan from the bank. A current account is sometimes also used for the purchase of inventory, but given the interest rates, this is often a more expensive solution and another form of financing is preferable.
A long-term business loan for machines
Machines that are on the balance sheet last longer than 1 year or 1 production cycle. It is therefore important to choose the right corporate financing. It is mainly important to match the term of the loan with the depreciation period of the machine. A machine that you expect to use for 5 years can therefore also be financed very well with a duration of 5 years. The advantage of matching the term of your business loan is that when the machine has been written off, and so requires replacement, your loan has also been repaid. When replacing the machine you can then enter into a new financing. Furthermore, there is a big distinction between generic and custom-made machines when financing. Generic machines can often serve as collateral for your loan, which reduces the risk for the financier. This is sometimes reflected in the interest in your quote. Machines that are tailor-made for you can not resell a financier if things go wrong. Another option might be to lease your machine.
