Financing a new piece of equipment out of your everyday cash can be a big burden on your cash flow and could even put your business at risk.
This is why bankers typically advise entrepreneurs to take out a loan for this type of big purchase. But how do you convince your banker to give you the equipment loan you need?
Trevor Fillo, Senior Account Manager with BDC in Edmonton, says that your lender will want to know how purchasing new equipment will impact your company. Will it increase your sales? Will it decrease your costs? Will it make you more productive?
“There has to be a tangible benefit, whether it is to produce more or the cost is less,” he says.
Buying equipment whether it’s for manufacturing, IT, trucks or a lumber mill, shouldn’t have a negative impact on your profitability, Fillo says.