Financing is an important part of starting and growing a business. However, there are a lot of misconceptions and confusion. Many people only have experience financing a house, car, or a new couch. Yet there is a whole world of financing business equipment and software.
This episode discusses financing for business and answers the most frequently asked questions.
Why do businesses finance equipment?
- Utilize banks money to start
- Keep current liquid money on hand
- Tax benefits
- Time value of money
Can a new business finance?
- Yes!
- You can use personal credit
What if you don't have perfect credit - should you finance? What if the rate is high?
- Start now, or don't start
- Risk and reward
- Do what you gotta do
Why not just use a credit card?
- Installment vs revolving credit
- Save your credit card for quick purchase / pay off like supplies or blanks
- Don't use personal revolving credit lines for business
Isn't interest bad?
- If you can make more money than the interest, you win
- Tax benefits
- Bank loans cost money, that's the way it works. They are in business too.
- Better to do something than nothing to win
What's the finance process like?
- Apply
- Review credit and terms with agent
- Accept, sign, deliver
What's financing vs leasing?
What if someone has a lot of other questions?
Isn't debt for suckers?
- Most businesses have debt
- You buy a house with a loan for the long-term benefits (equity)
- Is a car loan for a new and reliable car better than paying cash for a car that will break down?
Financing: assets vs liability
- A machine for business is different from a car
- This isn't just adding to your bills but giving you opportunity.
- Tax benefits
- You own something of real value vs taking on debt for a vacation or new tv
Overall, financing isn't complicated, but it feels scary. So is starting a business or buying a house. Those who take the risk are the ones who can be rewarded.
Learn more at https://coldesi.com/financing-options/
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