Types of Equipment Financing
For small and medium sized businesses, the types of business financing are basically an equipment loan or an equipment lease.
An equipment loan has a stated rate of interest and a term of repayment requiring principal and interest payments at monthly, quarterly, or semi annual periods of time. With an equipment loan, the borrower is the owner of the equipment being financing and the equipment typically has a security registration against it by the lender.
With an equipment lease, the leasing company owns the equipment not the lessee. An equipment lease will also require payments on a monthly, quarterly or semi annual basis.
There are two basic types of leases that being an operating lease and a capital lease. An operating lease does not obligate the lessee to purchase the equipment at the end of the lease term while a capital lease is set up for asset purchase at lease end.
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