Business Computer Financing

Small business computer financing may be one of the most important issues tackled when a start-up commerce venture is considered. In the end, the difficulty may really come in attempting to find the right machines for the particular needs of the enterprise owner. The financing itself may not be difficult to obtain, especially if the commerce credit history is good. Business computer financing can come from several different sources including the traditional sources and some that may be a little more outside the box in possibility. But the first step is the right choice of pc system.

One of the worst decisions any small commerce owner can make is an initial wrong choice of computer system. Since business computer financing may come down to how much of a loan is needed, why make a quick choice that may result in having to start over again with a new system in a few years? When choosing the right business pc system, every care must be made to make sure that there is enough memory to handle large databases and that the machine can be expanded for more sizable capability in the future. Getting these types of systems may cost more in the beginning, but will be worth the business computer financing investment over time. The question then arises about how to actually finance the purchases.

Conventional wisdom would say that the first place to stop for business computer financing would be at the bank. In most cases the bank, the most conservative of all lending institutions, offers the best interest rates on commerce loans. Of course their requirements for borrowers are also the highest of any other source. Before the September financial crisis, banks had a modicum of allowance for credit blemishes compared to other lending sources. Now no one can really know what the future holds, but the events happening recently portend a very tight credit atmosphere in the foreseeable future. This means that former cumulus cloud high requirements will now become stratospheric with banks soon, if not already.

So if an enterprise does have a flawed credit record, what is the next step in getting these computers financed? Consider the option of equipment leasing which gives tax benefits, no down payment requirements, and a chance to upgrade when something becomes obsolete. When equipment is bought outright, the equipment can be depreciated over time. This may give the commerce roughly a 20% value of the equipment each year for depreciation over five years, much of this depending on exactly what kind of equipment is being discussed. But leasing allows the full amount of the monthly lease to be deducted each year as enterprise expense. But since each enterprise is different, each circumstance should be explored for its own merits and liabilities. Sometimes buying the equipment is the better choice.

But there may be some non-traditional sources for outright purchase if the credit is shaky and the desire is to purchase. Consider business computer financing underwritten by what is known as a factor. A factor is an investor who offers to loan money for a percentage of invoices that commerce generates. In fact, factoring can be arranged in a number of different ways for business profitability. Some arrangement include providing cash up front for invoices, money for orders that are placed but not yet billed, and even money for bills that come in before money arrives from billable invoices. All of these are based on full repayment and a commission on commerce income. So the consideration of factoring may be an option and an enterprise owner may want to look at finding a hard money lender in the area.

Another untraditional source of business computer financing is from an angel investor. This is a wealthy individual, probably living in the same geographical area as the enterprise. For a business owner seeking angel financing, a very well thought out business plan and an impressive financial statement must be present. Only a very few angel provided funding agreements are ever approved, but for the one really needing cash for equipment, no opportunity should be overlooked. Factoring money, sometimes known as hard money, as well as angel financing will usually have high interest rates. One of the great salvation prayers of scripture is found from the pen of King David in Psalm 25. "Lead me in thy truth and teach me: for thou art the God of my salvation; on thee do I wait all the day...remember not the sins of my youth, nor my transgressions..." (Psalm 25:5,7a)

Of course, there are the charge accounts that are available at computer stores. Their finance charges will be at least as high as credit card interest rates, but if a person can get an introductory low percentage rate that may save some money for the business. Finding sources for business computer financing may become more and more difficult for owners with the recent bank failures and the crisis on Wall Street. Analysts are predicting that only the most pristine of credit histories will be allowed credit for at least the near future. Strong and clear business plans as mentioned in regards to angel financing may ultimately be required for even low ceiling credit cards and businesses not passing the credit smell test will be vulnerable to finding very alternative financing solutions. Going to this kind of credit pedigree may find some owners on the corner selling lemonade for capital.