A Quick Guide on Business Equipment Financing

Jul 27, 2020

An effective balance between self-employment and salaried jobs can be a smart solution to the rapid growth of a country’s economy. In India, nearly 15 million individuals join the workforce almost every year. Since creating sufficient jobs at such a scale is impossible, the Indian youth need to focus on entrepreneurship and self-employment opportunities.

A major hurdle in the path to setting up a new business is the lack of capital. Acquiring the best and most advanced technologies is essential for any company to succeed today, irrespective of the industry. One can look for aid from equipment finance companies in India in this regard.

Below are some of the most popular businesses, where the quality of equipment plays a significant role.

Equipment-Intensive Businesses Requiring Finance – 

  1. Restaurants, bars and cafes

The restaurant business is one of the most profitable businesses in India. With Indians elevating their taste to the fine-dining experience, restaurant business in India is booming like never before. Nevertheless, opening your own café or restaurant requires significant investment, especially when it comes to equipment setup.

Commercial refrigeration units, oven, range, grill, steam table, mixers and POS machines are just some of the expensive equipment necessary to operate a restaurant. If you are planning to seek a loan to handle such costs, it is a decent equipment finance example.

  1. Home or commercial bakery

Home bakeries have become extremely popular in the last few years. According to a March 2019 report, India’s bakery industry was worth around $7.22 billion at that time. If you aspire to own such a bakery business in the future, you would need to invest in industrial-grade refrigerators, freezers, and oven, among others. Additionally, bakers must acquire top of the line mixers and dough proofers.

If you are wary about unsecured credit to fund your bakery business, you can opt for a gold loan from Rupeek Fintech Private Limited. One of the best equipment financing for startups, these loans are available against a borrower pledging his/her gold asset, like jewellery and ornaments.

  1. Cab hailing services

India’s taxi service industry is expected to grow at a CAGR of 13.7 until 2022. Thus, it is the ideal time to start with a cab service with multiplying opportunities for growth. Nevertheless, even if started small, it requires immense investment.

You would need to acquire the vehicles along with setting up a hassle-free way for clients to book the service and pay for it. When availing a loan to fulfil these needs, make sure you check the equipment finance interest rates offered by various lenders.

  1. Used car dealerships

When dealing with second hand vehicles, businesses need to enforce strict testing protocols to ensure the quality of the used vehicle. Used car dealerships are no different in this regard. Therefore, before you can start such a dealership, you need to acquire equipment and machinery capable of testing the various aspect of a vehicle’s performance.

Battery charger, jumper, vehicle lifts and other vehicle-related equipment are mandatory. Additionally, computers, printers and other office supplies would also be necessary for such a venture. Perform equipment finance rates comparison to ensure you get loans under the most favourable terms to fund the purchase of such equipment.

  1. Farming

If you own a plot of farming land, you can try your hands at farming. With necessary skills, dedication and advanced equipment, such businesses can lead to immense profits. However, funding the purchase of tractors, harrows, sprayers, and a host of other equipment can be difficult without a substantial source of credit. Farm equipment finance companies provide loans to fund such equipment purchase.

Regardless of the trade you pick, getting advanced technology in that sector should be your first order of business. If you are looking to rent pieces of equipment, instead of buying, you can contact an equipment leasing finance company to help you with the related expenses. Nevertheless, one should be wary of such business loans because they tend to incur substantial interest for the borrower.

A gold loan from Rupeek, on the other hand, is a more pocket-friendly option, especially if you have a considerable amount of gold jewellery lying around in safes and lockers. Such a form of credit provides an opportunity to utilise the equity lying in gold for securing finance and starting your dream venture.

Why is Gold Loan a Better Alternative for Equipment Finance?

The reasons listed below enlist why gold loans are quickly becoming the go-to option for equipment funding.

  • No credit rating check

Unlike business loans, where your CIBIL score determines whether you are eligible for the said credit, gold loans are available even when you hold poor ratings. These are secured loans, where your pledged gold serves as a security in lieu of which funding is released. Thus, lenders can afford to offer credit without performing a CIBIL score check. Gold loans can serve suitably as equipment loans for bad credit that can help you realise your entrepreneurial dreams.

  • Flexible tenor with various repayment options

Profit from businesses can be uncertain or uneven, especially for a new venture. Thus, sticking to a strict repayment schedule can be extremely difficult in some cases. Gold loans excel in this regard, easing hassle for borrowers by providing several repayment options.

You have the option to defer the entire payment up to the end of your loan tenor. Borrowers can also choose to clear gold loan interest payments as EMIs while clearing the principal liability through a single payment when tenor ends.

Additionally, gold loan tenor tends to be much shorter when compared to business loans. Rupeek Fintech Private Limited offers tenor ranging between six months and one year. Thus, one can service this advance early and reduce debt liability sooner.

  • Substantial LTV

Gold loans offer a substantial portion of the current market valuation of your gold items as the loan principal, known as LTV or loan to value ratio. Therefore, such high-value loans are typically suited when looking to start a new business. It can easily fund all your equipment purchase requirements, without ever needing to resort to expensive business loans.

Additionally, the minimal documentation involved, along with faster approval, is crucial for enterprises requiring financing urgently. In the case of sudden liquidity needs, a gold loan is an immediate option that businesses can consider today. With mobile applications and other features provided by equipment finance companies in India, these forms of credit are increasingly becoming easier to access.