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Financing helps businesses afford the tools of their trades

Entrepreneurs and business owners in Louisiana know financing is a part of almost every business. Small businesses often take out loans to cover raw materials or inventory costs, and many companies regularly use revolving lines of credit to pay employees or take care of other expenses. Financing the purchase of specialized equipment is also common. Equipment financing allows small businesses to make major purchases of necessary tools. It is used to pay for expensive farm machinery, office furniture, company vehicles, computers, information technology infrastructure and any other equipment a business might need.

A study by Fundera, a small business lender, found that 42 percent of small business owners use financing for major equipment purchases. Upgrading equipment is also a significant ongoing expense for many small businesses.

The number of lenders offering business equipment financing is increasing. A 2015 Wall Street Journal report said that small business lending by the top 10 U.S. banks had dropped by 38 percent from 2006. This is in part because of the prevalence of non-bank lenders who offer innovative platforms and tools designed to make equipment financing easier.

In a typical equipment financing deal, the lender will cover 80 to 90 percent of the equipment cost, leaving the remainder for the business to pay. The lender takes a security interest in the equipment. If the loan is not repaid, the lender can take the collateral.

If a small business owner has questions about equipment financing or other matters, an attorney might be able to help. A lawyer with experience in business law may review loan documents or communicate with the lender on his or her client's behalf. An attorney might be able to assist someone during the establishment of his or her business as well as draft documents to create a business entity or help with trademark and other intellectual property issues.

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