While necessary for many businesses to operate efficiently, warehouse equipment can be costly. Depending on the size of your business, stocking an entire warehouse with equipment can set your business back hundreds of thousands—if not millions—of dollars. While spending this kind of company cash might seem daunting, there’s a way to access this type of machinery affordably and responsibly: financing.
Companies commonly use financing to make large purchases, especially small businesses just starting out or trying to grow. Continue reading to learn more about financing your warehouse equipment, including the following:
- The importance of financing warehouse equipment
- What you need to know before financing warehouse equipment
- The benefits of financing warehouse equipment
- What type of warehouse equipment is generally financed?
The Importance of Financing Warehouse Equipment
The ability to finance necessary warehouse equipment gives businesses the resources they need to run a successful operation. Many business owners are weary about financing equipment, but they shouldn’t be. So long as you are aware of your budget and limitations, it’s a perfectly reasonable—and often beneficial—way to retain a productive work schedule without feeling as though you’ve just bankrupted your company.
While the total prices might be higher, financing warehouse equipment is similar to financing a car or a house.Most people don’t have the funds to purchase a $20,000 to $40,000 vehicle outright without spending the bulk of their savings. Even if they could, it would severely impact their available funds. However, by finding a bank or third-party lender to spend most of the cost for them, they can divide their remaining debt into more manageable monthly loans—with interest, of course.
The same idea remains with purchasing warehouse equipment. Without the ability to finance, many businesses would either be unable to afford the vital resources they need or they would put themselves in compromising positions by dropping large amounts of cash.
What You Should Know Before Financing Warehouse Equipment
When done responsibly, financing warehouse equipment can be advantageous for companies to get necessary machinery without making large payments upfront. However, there’s a lot to be aware of before you use it to buy a new forklift or cantilever rack. Consider the following questions:
How much can your business afford?
Before purchasing equipment with a financing method, it’s essential to have a realistic gauge of your company’s budget. Can you afford to pay off upcoming monthly payments on the amount of equipment you intend to buy? Can you make a sufficient down payment? Can you pay off the loans promptly without succumbing to an extraordinary interest rate? Knowing how much your business can handle financially can prevent lenders from taking your machinery as collateral.
How much can your business afford?
Before purchasing equipment with a financing method, it’s essential to have a realistic gauge of your company’s budget. Can you afford to pay off upcoming monthly payments on the amount of equipment you intend to buy? Can you make a sufficient down payment? Can you pay off the loans promptly without succumbing to an extraordinary interest rate? Knowing how much your business can handle financially can prevent lenders from taking your machinery as collateral.
Do you qualify for financing?
Qualifying for a warehouse equipment loan depends on many factors, such as your business credit score, your company’s regular cash flow, and how much you can put on a downpayment. Additionally, check to see what types of loans your company can apply for, such as SBA and 504. Find the answers to these questions before contacting a lender.
Should you buy used warehouse equipment?
Buying used warehouse equipment can soften the blow to your company’s wallet if you’re looking to save on expenses. When purchased from a respected provider, used machinery works just as well as new equipment and is more cost effective. This makes things like terminal tractor or forklift financing much more manageable.
The Benefits of Financing Warehouse Equipment
It may seem like financing warehouse equipment puts your company in debt to a large loan, but in reality, many advantages come from this payment method. Here are some of the most common benefits of financing expensive equipment:
Spreads Out Payments
The most significant benefit of financing warehouse equipment is that your business doesn’t have to shell out vast amounts of cash upfront, which could cause additional financial problems. Instead, they can break up payments into bite-sized, more realistic, and payable chunks.
Anxious about dropping cash on specific warehouse equipment but can’t do daily tasks without them? Try renting! Plenty of trusted companies provide affordable and reliable equipment rentals, allowing your business to remain productive without committing to expensive purchases.
Allows for Additional Investing
Without making large upfront payments, your business is left with more available cash. This gives you more opportunities to invest in other avenues that could benefit your business, such as upgrading their facility, purchasing smaller equipment, hiring additional staff, and more.
Can Increase Your Business Credit Score
Just as paying off your car or house payments on time increases your individual credit, so does paying off your warehouse equipment. This can grant more flexible finance options in the future and make obtaining them even easier.
Tax Benefits
Several tax benefits are available to those who wish to finance heavy warehouse equipment. For example, section 179 lets businesses deduct the total amount of equipment up to $1 million within the year of its purchase. Certain loan interest can also be written off on tax returns for those that don’t qualify.
What Type of Warehouse Equipment Is Typically Financed?
Whether you’re in the market for one specific piece of warehouse equipment or a variety, you’re likely going to need to finance it. But what type of warehouse equipment do companies generally finance?
- Forklifts
- Storage equipment
- Lift trucks
- Pallet racking
- Terminal tractors
- Electric tugs
- Aerial lifts
- Barcode readers
- Conveyor systems
If you’re considering purchasing any of these pieces of equipment, it may be in your best interest to utilize financing. Or, perhaps you’d prefer to rent or buy used warehouse equipment from a professional material handling company? We know just the one.
Need High-Quality Yet Affordable Equipment? HTX Material Handling Can Set You Up
As a leading material handling equipment company, HTX Material Handling has all the warehouse equipment you could possibly need at reasonable prices. Over 75 years of combined business experience have shaped our processes and goals into what they are today, with a strong focus on delivering satisfying results for each and every one of our customers. We offer solutions for maintenance, automation, material handling, conveyor systems, loading docks, lift equipment, and more, including long-term and short-term equipment rentals.
If you’re looking for effective warehouse solutions to make your financing as easy as possible, call HTX. We’ll set you up with the products you need to complete your daily operations smoothly without breaking the bank.