Finimpact

Conclusion

An equipment line of credit can provide a flexible way to finance business equipment. Since you can draw on it as needed, you only have to spend what you truly need. With online options and traditional brick-and-mortar options, equipment lines of credit can be fairly flexible.

FAQ

What’s the difference between a business credit card and a line of credit?

A line of credit operates similarly to a credit card but is an entirely different financing option. A business credit card should never be used for such large purchases as new equipment, as you likely don’t have a credit line large enough to handle such a purchase. A business credit card is meant for day-to-day purchases that can be paid off quickly.

How does a lease line of credit differ from an equipment line of credit?
An equipment line of credit eventually allows you to own the equipment you bought on the credit line. A lease line of credit, while operating very similarly to an equipment line of credit, allows you to lease equipment using your credit line. This means you can lease from multiple places or lease multiple pieces of equipment on one line of credit as long as you don’t go over the cap.
What types of equipment line of credit are available?

You’ll find a few different types of lines of credit available to you, including:

   Short-term lines of credit - Many ELOCs will be short-term lines of credit with terms from just a few months to a year.

   Long-term lines of credit - Long-term lines of credit are over a year. You’ll find fewer of these, but if you need larger loans, they’ll likely be long-term.

   Asset-based financing - When you need to put up collateral to secure your line of credit, this will be asset-based financing. The asset you’re purchasing will be seized if you stop making payments, ensuring the lender can still make money on your debt.

   Bank lines of credit - While many lines of credit are offered by online lenders, plenty of banks also offer these lines of credit.

Is a business line of credit the same as an equipment line of credit?

An equipment line of credit is a subcategory of business lines of credit. Business lines of credit are more general, meaning you can use them to purchase anything you need for your business. Equipment lines focus more on equipment purchasing.

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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