That five-figure price tag on a new truck or commercial oven can be a real showstopper. It feels like a massive gamble, forcing you to choose between making a critical investment and keeping your bank account stable. But what if you could get that essential asset without the upfront financial hit? Equipment financing is designed for exactly this moment. It breaks down a huge, intimidating expense into manageable monthly payments. This turns a potentially stressful purchase into a smart, sustainable growth strategy, allowing you to get the tools you need to serve more customers and bring in more revenue right away.
Key Takeaways
- Use financing as a growth strategy: This isn’t just about buying equipment; it’s about protecting your cash flow, building your business credit with on-time payments, and using potential tax deductions to reinvest in your company.
- Look beyond the monthly payment: A smart decision requires understanding the Total Cost of Ownership. Compare loans versus leases, factor in interest and maintenance, and confirm the equipment will generate a positive return before you commit.
- Prepare your finances to get the best deal: Your credit score and organized documents are your strongest negotiation tools. Always compare offers from multiple lenders and read the fine print to find a reliable partner and avoid costly surprises.
What Is Equipment Financing?
At its core, equipment financing is a type of business loan that helps you purchase the physical assets you need to run and grow your company. Instead of paying for expensive machinery, vehicles, or technology with a large, upfront cash payment, you can spread the cost out over time. This approach allows you to get the tools you need right away while keeping your cash reserves healthy for other critical expenses like payroll, inventory, or marketing.
Think of it as a strategic way to invest in your business’s future without disrupting your present-day cash flow. Whether you’re a contractor who needs a new truck, a restaurant owner upgrading your kitchen, or a tech startup buying new servers, equipment financing makes essential purchases more manageable. It’s a common tool used by smart business owners to scale their operations sustainably, ensuring they have the right equipment to stay competitive and meet customer demand.
How Does Equipment Financing Work?
The process is pretty straightforward. First, you identify the piece of equipment your business needs. Then, you apply for financing from a lender to cover the cost. One of the biggest advantages of this type of loan is that the equipment itself typically serves as collateral. This means if you can’t make your payments, the lender can repossess the asset. Because the loan is secured by the equipment, it can often be easier to qualify for than other unsecured business loans. You’ll make regular payments over an agreed-upon term, and once the loan is fully paid off, you own the equipment outright.
What Kind of Equipment Can You Finance?
You can finance a surprisingly wide range of business assets. It’s not just for heavy-duty machinery. Nearly any tangible item your business needs to operate can be financed. This includes everything from company vehicles like cars and trucks to the technology that keeps your office running, such as computers, printers, and software. You can also finance industry-specific tools, whether that’s commercial ovens for a bakery, salon chairs for a hair studio, medical equipment for a private practice, or even the desks and chairs for your workspace. If it’s a physical asset that helps your business generate revenue, chances are you can get financing for it.
When to Use Equipment Financing
Equipment financing is the perfect solution when you need an essential asset but don’t want to drain your bank account to get it. It’s especially useful for businesses in capital-intensive industries like construction, manufacturing, and healthcare, where tools are both expensive and non-negotiable. Using financing allows you to acquire the equipment you need to take on bigger jobs, improve efficiency, or serve more customers. It’s a strategic move that lets you invest in growth while preserving your working capital for daily operations and unexpected opportunities. Essentially, you get the tools you need now and pay for them as they help you bring in more income.
Your Equipment Financing Options
Once you’ve decided to finance, you’ll find there isn’t just one path forward. Several financing options are available, each with its own structure and benefits. The right choice for your business depends on your cash flow, how long you plan to use the equipment, and whether you want to own it outright in the end. Think of it like choosing between buying a car, leasing it, or having a flexible credit line just for transportation needs. Let’s walk through the most common types so you can find the perfect fit for your goals.
Equipment Loans
An equipment loan is probably what you first think of when you hear “financing.” It’s a straightforward agreement where a lender gives you a lump sum to purchase a specific piece of equipment. You’ll make regular payments over a set term, and once the loan is fully paid off, you own the equipment free and clear. This is a great option if you plan to use the asset for a long time. Plus, once you own it, that equipment becomes a valuable asset on your balance sheet that can be used as collateral for future loans.
Equipment Leases
If you’re not ready to commit to ownership or want to keep your monthly payments lower, an equipment lease might be a better fit. Think of it as a long-term rental. You get to use the equipment for a set period in exchange for regular lease payments. Since you’re not paying for the full value of the asset, these payments are often lower than loan payments, and you may not need a down payment. At the end of the lease term, you typically have the option to return the equipment, renew the lease, or purchase the asset at its current value.
Equipment Lines of Credit
An equipment line of credit offers the most flexibility. Instead of getting a single loan for one purchase, you’re approved for a revolving credit limit that you can draw from as needed. This is perfect if you anticipate needing multiple pieces of equipment over time or want a safety net for repairs and upgrades. You only pay interest on the amount you actually use, not the entire credit line. This option gives you the freedom to make purchases on your own timeline without having to apply for a new loan every time a need arises.
Sale-Leaseback Arrangements
This is a creative financing strategy for businesses that already own valuable equipment but need to free up cash. In a sale-leaseback arrangement, you sell your equipment to a financing company for a lump-sum payment and then immediately lease it back from them. You get a quick injection of working capital without losing access to the essential tools you need to operate. It’s a smart way to turn an existing asset into liquid cash that you can reinvest into other areas of your business, like marketing or inventory.
The Perks of Financing Your Equipment
Deciding to finance your equipment is more than just a way to pay for new tools—it’s a strategic business move. When you finance, you’re not just getting the gear you need to operate and grow; you’re also setting your business up for better financial health. For many small business owners, the idea of taking on debt can feel intimidating, but equipment financing is a specific type of funding designed to generate a return on investment. The right piece of equipment can increase your production, improve your efficiency, or allow you to offer new services, directly contributing to your bottom line.
Think of it as an investment in your company’s stability and future potential. By spreading out the cost of essential assets, you give yourself the breathing room to handle day-to-day expenses, jump on unexpected opportunities, and scale your operations at a sustainable pace. Instead of tying up a large chunk of your cash in a single purchase, you can put that money to work in other areas of the business, like marketing or hiring. From keeping your cash reserves intact to building a stronger credit profile, the benefits can have a lasting impact. Let’s break down some of the key advantages that make equipment financing such a smart choice for so many business owners.
Keep Your Cash Flow Healthy
Cash flow is the lifeblood of any business, and making a massive upfront purchase can put a serious strain on it. Equipment financing allows you to get the tools you need to grow without draining your bank account. Instead of one large expense, you’ll have predictable monthly payments that are much easier to fit into your budget. This approach lets you keep your cash on hand for other critical needs, like payroll, marketing campaigns, or inventory. By preserving your working capital, you maintain the flexibility to run your business smoothly and confidently, even while investing in its growth.
Find Potential Tax Advantages
One of the most compelling reasons to finance equipment is the potential for significant tax savings. Thanks to Section 179 of the IRS tax code, many businesses can deduct the full purchase price of qualifying new or used equipment during the tax year it was placed into service. This means you could write off the entire cost of a new vehicle, machine, or software system right away instead of depreciating it over several years. This powerful tax incentive can substantially lower your taxable income, freeing up even more cash for your business. As always, it’s a good idea to chat with a tax professional to understand how this applies to your specific situation.
Build Your Business Credit
Just like with your personal credit, building a strong business credit history is essential for your company’s financial future. Successfully managing an equipment financing agreement is an excellent way to do just that. Each on-time payment you make is typically reported to the major business credit bureaus, helping you build a positive credit profile. A solid credit history makes it easier to qualify for other types of funding down the road, from business loans to lines of credit, often with better interest rates and more favorable terms. It’s a proactive step that pays off long after your equipment is paid for.
Get Flexible Payment Options
Equipment financing isn’t a one-size-fits-all solution. Lenders understand that every business has unique needs and cash flow cycles, which is why they often provide flexible payment options. You may find plans with lower payments for the first few months, seasonal payment schedules that align with your busy season, or various term lengths to match your budget. Many agreements also include end-of-term flexibility, giving you the option to purchase the equipment, upgrade to a newer model, or simply return it. This adaptability ensures you can find a financing structure that works for your business, not against it.
Support Sustainable Growth
Ultimately, equipment financing is a tool that supports smart, sustainable growth. It empowers you to invest in the assets you need to stay competitive and efficient without taking on unnecessary financial risk. Whether you’re upgrading technology, expanding your production capacity, or improving your services, financing allows you to make these critical investments while preserving your working capital. By acquiring essential equipment on a manageable payment plan, you can scale your operations responsibly, ensuring your business has the foundation it needs to thrive for years to come.
How to Qualify for Equipment Financing
Getting ready to apply for financing can feel like a big step, but it’s really about showing lenders that your business is a solid bet. Lenders want to see a clear picture of your financial health and your ability to pay back the loan. By understanding what they’re looking for ahead of time, you can put your best foot forward and make the process much smoother. Let’s walk through the key factors that will help you get approved.
What Credit Score Do You Need?
Let’s talk about the big one: your credit score. Lenders will look at both your personal and business credit history to gauge your financial reliability. While some lenders may approve scores as low as 500, a stronger credit score will almost always get you better interest rates and more favorable terms. If your score isn’t where you’d like it to be, don’t get discouraged. This is your chance to focus on improving it. Tools like M1 Credit Solutions can help you identify and dispute errors on your credit report, giving you a clear path to building a stronger financial profile before you apply. A little prep work here can save you a lot of money in the long run.
How Long Should You Be in Business?
Lenders love stability, and your time in business is one way they measure it. Many prefer to see a business that has been up and running for at least two years. This gives them a track record to review, showing that you’ve successfully managed your operations and finances over time. If you’re running a newer business, you can still get financing, but you may need to provide a stronger application in other areas, like a higher credit score or a larger down payment. Think of it as an opportunity to showcase your business’s potential and solid planning, even if you don’t have a long history just yet.
Gather Your Documents
Being prepared is half the battle. Before you even start filling out applications, get your financial documents in order. Lenders will want to see a complete picture of your business’s health to assess your ability to repay the loan. You’ll likely need to provide items like recent bank statements, business and personal tax returns, a detailed business plan, and quotes for the equipment you want to buy. Having everything organized and ready to go shows lenders you’re serious and professional, which can help speed up the approval process and make a great first impression. It shows you respect their time and your own.
Does Your Industry Matter?
Yes, your industry can definitely play a role in your financing options. Some industries, like trucking or construction, have a long history with equipment financing, so lenders are very familiar with their needs. Other, newer industries might face a bit more scrutiny. The key is to find a financing partner who gets what you do. Working with a provider that understands the ins and outs of your specific field can make a huge difference. They’ll be better equipped to offer financing strategies that align with your business’s unique goals and cash flow cycles, rather than trying to fit you into a one-size-fits-all box.
What to Expect During the Approval Process
The approval process usually starts with a simple application. You’ll provide basic information about your business, your finances, and the equipment you’re looking to finance. From there, your application may be reviewed by the lender or sent to a network of lenders to find the best possible match for your needs. Don’t be surprised if they come back with a few follow-up questions or requests for additional documents—it’s all a standard part of their due diligence. The timeline can vary, but having your paperwork in order can help keep things moving smoothly from start to finish. Patience and preparedness are your best friends here.
Breaking Down the Costs of Equipment Financing
Looking at the price tag of a new piece of equipment is just the first step. To truly understand the financial impact on your business, you need to look at the complete picture. The total cost of financing goes beyond the monthly payment and includes interest, fees, and other long-term expenses. Getting a handle on these details from the start helps you budget effectively and find a financing partner that aligns with your goals. Let’s break down the key costs you should expect.
Interest Rates and APR
Your interest rate is what the lender charges you to borrow money, and it’s one of the biggest factors determining your total cost. Rates often follow the market, but your personal and business credit scores have the most influence on the offer you receive. A stronger credit profile typically helps you secure a lower rate. The Annual Percentage Rate (APR) is even more helpful, as it bundles your interest rate with most lender fees, giving you a more complete view of your borrowing costs. Many lenders can also create custom payment plans, like interest-only periods or quarterly payments, to match your business’s unique cash flow.
Down Payments and Other Fees
Most lenders will ask you to have some skin in the game through a down payment, which is usually 10% to 20% of the equipment’s price. Putting more money down can lower your monthly payments and reduce the total interest you pay over time. However, if you’re a well-qualified applicant, some lenders offer 100% financing, which can be a great way to get the equipment you need while preserving your cash. This may even include “soft costs” like shipping and installation. Be sure to ask about other potential loan fees, such as origination or documentation fees, so you have a clear understanding of all upfront costs.
Calculate the Total Cost of Ownership
A savvy business owner knows the monthly payment is only part of the story. To make a smart decision, you need to calculate the Total Cost of Ownership (TCO), which covers every expense tied to the equipment during its useful life. This includes ongoing costs for maintenance, insurance, repairs, supplies, and even energy consumption. Before you commit, create a forecast showing how the new equipment will generate more revenue or reduce your expenses. This not only proves to the lender that you can make the payments but also confirms for you that the purchase is a worthwhile business investment.
Watch Out for Hidden Costs
Unexpected expenses can quickly derail your budget. If you’re thinking about financing used equipment to cut costs, proceed with caution. While the initial price is lower, financing used gear can be risky due to faster depreciation and a higher likelihood of mechanical issues. Always read your financing agreement carefully to spot other potential costs. For example, some lenders charge a penalty if you pay off the loan early, while others might require you to carry a specific and potentially expensive insurance policy. Asking direct questions about these details upfront will help you avoid surprises and ensure the terms work for you.
Financing vs. Leasing: What’s the Difference?
When you need new equipment for your business, you’ll likely face a big question: should you finance it or lease it? Both options get the gear you need in your hands, but they work very differently when it comes to ownership, costs, and long-term flexibility. Think of it like deciding between buying a house and renting an apartment. One path leads to ownership and building equity, while the other offers lower upfront costs and less responsibility.
Choosing the right path depends entirely on your business goals, your cash flow, and the type of equipment you need. If you plan on using a piece of machinery for the next decade, buying it might make the most sense. But if you’re in a fast-moving industry where technology becomes outdated every couple of years, leasing could be a smarter move. Let’s break down the key differences so you can decide which approach fits your business best.
Who Owns the Equipment?
This is the most fundamental difference between financing and leasing. When you get an equipment loan, you are borrowing money to buy the equipment. From day one, it’s considered an asset on your company’s balance sheet. Once you make that final loan payment, you own it outright, free and clear. You can keep using it, sell it, or trade it in for something new.
With a lease, you’re essentially renting the equipment for a specific period. The leasing company owns the asset, and you pay them for the right to use it. You aren’t building any equity. This can be a great option for equipment that you don’t want to own long-term, especially if it requires frequent upgrades.
Comparing Payment Terms
Financing and leasing also have different payment structures. With an equipment loan, you’ll typically make a down payment and then have fixed monthly payments that cover both the principal and interest. Loan terms can be flexible, ranging from a few months to several years, depending on the lender and the cost of the equipment.
Leasing often requires little to no down payment, and the monthly payments are usually lower than loan payments. That’s because you’re only paying to use the equipment for a set term, not for its full value. Lease terms are often set for specific periods, like three, seven, or ten years. This can make equipment finance more accessible if you need to preserve your cash.
Who Handles Maintenance?
When you own your equipment through a loan, you’re responsible for all the upkeep. If it breaks down or needs a tune-up, the cost of repairs comes out of your pocket. This gives you full control, but it also means you carry all the risk of unexpected maintenance expenses.
In many lease agreements, the leasing company is responsible for handling maintenance and repairs. This can be a major advantage, as it protects you from surprise costs and ensures the equipment is always in good working order. It simplifies your budget and lets you focus on your business, not on fixing broken machinery. Always be sure to check your agreement, as not all leases include maintenance.
What Happens When the Term Ends?
The end of the term looks very different for each option. Once you’ve paid off an equipment loan, the process is simple: you own the equipment. It’s yours to do with as you please. This is ideal for assets that have a long, useful life and hold their value well.
When a lease ends, you have a few choices. You can typically return the equipment and walk away, renew the lease to continue using it (often at a lower rate), or buy the equipment at its current market value. This flexibility is a key benefit of equipment leasing, as it allows you to adapt as your business needs change.
What’s New in Equipment Financing?
The world of equipment financing is always changing, and recent trends are making it more accessible, flexible, and user-friendly for business owners like you. Gone are the days of mountains of paperwork and rigid, one-size-fits-all loan agreements. Today’s financing landscape is shaped by technology and a better understanding of what small businesses actually need to succeed. From simpler online applications to a greater focus on sustainability, these shifts are designed to help you get the equipment you need with less hassle, so you can focus on growing your business.
Simpler Digital Applications
If you’ve ever applied for a traditional loan, you know how slow and paper-intensive it can be. Thankfully, that process is getting a major digital makeover. Lenders are now using technology to create simple, online application experiences that you can complete in minutes, not days. This shift is driven by powerful FinTech software that automates everything from origination to account management. For you, this means faster decisions, less back-and-forth, and the ability to upload documents from your computer or phone. The entire process is becoming more transparent and efficient, removing old barriers and helping you get funded faster.
More Alternative Lenders
You’re no longer limited to just big banks when seeking equipment financing. A growing market of alternative lenders has emerged, creating more options for small business owners. These online lenders and private financial institutions often have more flexible qualification criteria than traditional banks, making them a great fit for startups or businesses with less-than-perfect credit. Because they specialize in working with small to medium-sized enterprises, they understand your unique challenges. In fact, some reports show that alternative lenders approve more than half of their business loan applications, opening doors for entrepreneurs who may have been denied elsewhere.
Flexible Usage Models
The concept of ownership is becoming more fluid. Instead of buying a piece of equipment outright, many businesses are moving toward flexible, usage-based models. Think of it as “equipment-as-a-service”—you pay for what you use, whether it’s by the hour, by the mile, or by the output. This trend reflects a broader marketplace evolution where businesses want solutions that align with their revenue and operational needs. These innovative financing structures reduce your upfront investment and can make your monthly costs more predictable. It’s a smart way to access top-of-the-line equipment without the long-term commitment of a traditional purchase.
Sustainable Equipment Choices
As more companies prioritize sustainability, the financing industry is taking note. There’s a growing interest in funding used, refurbished, and energy-efficient equipment. This approach is not only good for the planet but also great for your budget. While financing used equipment can sometimes be seen as risky due to depreciation and potential maintenance issues, many lenders are getting better at it. They are developing more sophisticated methods for valuing pre-owned assets and creating specialized loan products for green equipment. This trend allows you to make cost-effective and environmentally conscious decisions for your business.
How to Manage Your Finance Agreement
Getting approved for equipment financing is a huge win, but the work doesn’t stop there. Your finance agreement is more than just a contract; it’s the roadmap for your relationship with the lender for the entire term. Managing it well protects your investment, your business credit, and your peace of mind. A little proactive management can prevent major headaches down the road and keep your business running smoothly.
Think of it like maintaining the equipment itself—you need to give your financing agreement regular attention to ensure it’s still working for you. Here’s how to stay in control of your agreement from start to finish.
Stay on Top of Payments
This might seem obvious, but it’s the most critical part of managing your agreement. Late payments can trigger fees and damage your business credit score, making it harder to get financing in the future. The good news is that equipment financing is designed to have predictable payments, which helps with managing cash flow effectively.
Set up automatic payments to avoid missing a due date, or put recurring reminders in your calendar a few days before the payment is due. If you ever anticipate having trouble making a payment, contact your lender immediately. They may be willing to work with you on a temporary solution, which is always better than letting the account go delinquent.
Understand Maintenance Requirements
Your agreement will outline who is responsible for maintaining the equipment. Usually, that’s you. Staying on top of regular maintenance keeps your equipment running efficiently and helps it retain its value. This is especially important if you’re financing used equipment, which can come with a higher risk of mechanical issues.
Review your contract to see if there are specific maintenance schedules or requirements you need to follow to keep your agreement in good standing. Neglecting maintenance could not only lead to costly repairs but might also violate the terms of your financing, so it’s smart to know exactly what’s expected.
Get the Right Insurance
Almost every lender will require you to carry insurance on the financed equipment. After all, it’s their collateral until you pay it off. This protects both you and the lender in case of theft, damage, or total loss. The high costs of replacing specialized equipment can be a huge burden, and the right insurance policy is your safety net.
Make sure your coverage meets the minimum requirements laid out in your finance agreement. Don’t just go for the cheapest option; ensure the policy provides enough coverage to fully replace the equipment. Send proof of insurance to your lender as soon as you have it to avoid any compliance issues.
Know Your Refinancing Options
Your financial situation can change over the course of your loan term. Maybe your business credit has improved, or perhaps market interest rates have dropped. In these cases, refinancing your equipment loan could be a smart move. Refinancing allows you to replace your current loan with a new one that has better terms, like a lower interest rate or a smaller monthly payment.
This can turn potential financial obstacles into opportunities to improve your cash flow. Check your agreement for any prepayment penalties, and don’t hesitate to explore your options. A better deal might be out there, especially if your business is in a stronger financial position than when you first got the loan.
How to Choose the Right Financing Partner
Finding the right financing partner is just as important as finding the right piece of equipment. This isn’t just a transaction; it’s a relationship that can impact your business’s financial health for years. You want a lender who understands your goals and offers terms that support your growth, not hold you back. Taking the time to carefully vet your options will pay off in the long run, giving you the confidence that you’ve made the best choice for your company’s future. Think of it as hiring a key team member—diligence is key.
Compare Your Lender Options
Your first step is to shop around. Don’t just go with the first offer you receive. Look at traditional banks, credit unions, online lenders, and even financing offered directly from the equipment manufacturer. When you apply, lenders will evaluate the equipment’s value, your business’s ability to make payments, and your credit history. Knowing this helps you prepare. Create a simple spreadsheet to compare interest rates, fees, term lengths, and any special conditions from at least three different lenders. A strong business credit profile can also open doors to better terms, so it’s always a good idea to know where you stand before you start applying.
Read the Fine Print
The loan or lease agreement is a legally binding contract, and the details buried in it matter—a lot. Before you sign anything, read every single line. Pay close attention to clauses about prepayment penalties, late fees, and insurance requirements. What happens if you want to pay the loan off early? Are the late fees reasonable? What are your obligations if the equipment is damaged? For leases, you’ll want to check your agreement for details on end-of-term options, like whether you can buy the equipment and at what price. Getting clear on these points now prevents costly surprises later.
Tips for Negotiating a Better Rate
Many people don’t realize that financing terms can often be negotiated. If you’ve done your homework, you’re in a great position to ask for a better deal. Start by strengthening your application. You can create detailed forecasts showing exactly how the new equipment will increase your revenue or cut costs, proving you can easily handle the payments. Don’t be afraid to mention if you have a better offer from another lender. A good credit score is also one of your strongest negotiation tools. Lenders want to work with reliable borrowers, and a solid financial history gives them the confidence to offer you their best rates.
Spot the Red Flags
Unfortunately, not all lenders have your best interests at heart. It’s crucial to recognize warning signs of a bad deal or a predatory lender. Be wary of anyone who uses high-pressure tactics to get you to sign immediately. A reputable partner will give you time to review the contract thoroughly. Other red flags include vague terms, hidden fees that aren’t clearly disclosed upfront, or a guaranteed approval without reviewing your finances. Also, be cautious with lenders who push you to finance old or used equipment without a proper valuation, as its potential mechanical issues can make it a risky investment.
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Frequently Asked Questions
Can I get financing for used equipment? Yes, you absolutely can. Financing used equipment is a popular way to cut down on initial costs, and many lenders are open to it. The key is to be a smart shopper. Make sure the equipment is thoroughly inspected and that you have a clear idea of its remaining lifespan. Lenders will be more cautious, so they’ll want to see that the asset is a sound investment for your business and still has enough value to serve as collateral for the loan.
How quickly can I get approved for equipment financing? The timeline can vary quite a bit, but it’s often much faster than you might think. With many online and alternative lenders, you can get a decision within 24 to 48 hours, especially if you have all your documents in order. Traditional banks might take a bit longer, sometimes a week or more. The best way to speed up the process is to be prepared with your bank statements, tax returns, and a quote for the equipment before you even start the application.
Will applying for equipment financing affect my personal credit score? It’s very likely that a lender will check your personal credit, especially if you have a newer business. They see your personal financial habits as an indicator of how you’ll manage your business finances. This initial check can result in a hard inquiry on your report. However, once you secure the financing, the loan is for your business. Making your payments on time will primarily build your business credit profile, which is essential for securing better financing opportunities in the future.
Is an equipment lease or a loan the better choice? There’s no single right answer—it really comes down to your long-term goals for the asset. A loan is generally the best path if you want to own the equipment outright and use it for many years, as it becomes a valuable asset on your books. A lease is often a smarter move for technology that becomes outdated quickly or if your top priorities are lower monthly payments and minimal upfront cash.
What happens if my business has a slow season and I might miss a payment? The most important thing you can do is be proactive. If you anticipate having trouble making a payment, contact your lender immediately, well before the due date. Many lenders understand that business income can fluctuate and are willing to discuss temporary solutions, such as a deferred payment. Open communication is far better than letting the account become delinquent, which can harm your business credit and your relationship with the lender.
