If you’re looking to borrow money for your business with the express purpose of adding new and improved equipment to your operation, you really ought to consider the pros and cons of buying vs leasing.

You might think that doing one is more savvy than the other, but it really comes down to circumstance and personal preference.

It might just be the case that you are adverse to leasing, preferring to own the equipment outright. But if, for example, you are adding a new vehicle to your business, you should consider how far and how often it will be driven.

More miles tips the scale in favor of owning, while fewer miles would suggest it’s better to lease.

If you do opt to buy the item, you can spread the cost with a repayment plan, however this will typically require a large upfront cost in the form of a down payment.

And remember, by purchasing, the monthly payments will eventually end, but the item will depreciate in value during that time. Lease payments, on the other hand, will continue indefinitely until you either end the contract or can no longer afford them, and you are usually able to upgrade the equipment as part of the agreement.

Business Loans – A World of Possibilities

Short-term or long-term. Secured or unsecured. Bank or SBA. Buying or leasing.

Unfortunately, there’s no one-size-fits-all solution. When faced with the decision of borrowing money, you will have to take into consideration your own unique set of circumstances.

The points raised in this series of posts should help you make a better decision. And if you’d like to discuss the issue further, please contact us at Checkbox.

The post Should you buy or lease your business assets? appeared first on Checkbox Accounting.

SBA loans are partially guaranteed by The U.S. Small Business Administration. They offer a variety of loan programs for very specific purposes, from Small Business loans and Microloans to Real Estate & Equipment loans and Disaster loans.

Depending on where you are with your business, and if you fulfill their criteria, you can borrow money from the SBA for a number of different reasons. These include:

• Purchase of real estate
• Building renovation
• Equipment purchase
• Inventory purchase
• Business acquisition
• Expansion of an existing business
• Business startup
• Refinancing of an existing debt; or
• Supply working capital

SBA loans typically have lower interest rates and fees than the more conventional loans from big banks and other financial institutions. Longer repayment terms can also be negotiated, with the interest rate fixed for a predetermined period of time.

However, you will still need a solid business plan to get a loan from the SBA, so be prepared before you apply.  Can we help? Contact us at Checkbox.

Next month we take a look at the benefits of buying vs leasing business assets. Stay tuned!

The post The Benefits of SBA Loans appeared first on Checkbox Accounting.

Or maybe you’re between boardroom meetings, planning the growth and expansion of an existing company.

No matter where you are in the lifecycle of your business, one thing will always ring true.

You will need cash.

After all, cash is king. But it’s not always readily available.

That’s why it’s fundamentally important that you, as a business leader, understand the ins and outs of business loans.

In this series of three posts, we’ll provide you with an overview of the available loan types; the concerns you may experience as a borrower; the various push backs that can come from lenders; the benefits of SBA loans; and the pros and cons of buying vs leasing equipment.

What Type of Loan Do You Need, and Why?

Before deciding that your business definitely needs a loan, you must first ask yourself for what purpose you are borrowing the money.

Typically, loans can be categorized as short-term and long-term, and will be secured or unsecured (difficult to obtain).

If you’re borrowing money to get started, you will most certainly be asked for a Personal Guarantee. That is to say, you will be required to personally vouch that the money will be repaid, even if the business fails.

It’s also less likely that you will be able to borrow the money and repay it over a longer period of time if you do not have a track record in the sector or industry you are entering with your new business.

However, if you have an established business turning a profit, you’ll find borrowing money on more agreeable terms much easier.

You may still be asked for collateral to secure the loan, which can take the shape of valuable equipment, for example. This would then be seized by the lender to recoup their losses should you fail to repay the loan.

Alternatively, if the loan is unsecured, you may be faced with higher interest rates, meaning repaying a great deal more than you borrowed over the duration of the loan.

Concerns Go Both Ways, You Know

Borrowing money is a big decision, particularly if you’re still at the early stages of your entrepreneurial journey.

You may have some apprehension when it comes to taking on a loan, and that’s understandable. Interest rates and bank fees can be confusing at the best of times, while the fine print of a loan agreement can throw its fair share of curve balls. For instance, you can often be penalized for repaying your loan early, so that’s definitely something of which to be aware.

Your best bet is to shop around, gather all the necessary information, and find a bank or financial institution with which you feel comfortable.

But even if you come armed with all the necessary facts and figures, lenders can still be concerned enough to not offer you a loan.

You ought to be aware that they will question your ability to repay the money you’re borrowing, your collateral, your credit history (personal and business), the cash flow forecast of your business, and even the competency of your management.

With this in mind, you may wish to look at borrowing money from the SBA.  Stay tuned for our next post which outlines the benefits of an SBA loan.

Questions? Contact us at Checkbox.

The post A Guide to Selecting the Right Business Loan appeared first on Checkbox Accounting.