Some business owners look for working capital while sitting on a valuable piece of equipment. A manufacturing machine, excavator or backhoe can represent equity that has never been part of the funding conversation.
That is something we want to look at before defaulting to another short-term agreement.
Start with the equipment and the existing debt
An equipment cash-out refinance may allow an eligible business to borrow against qualifying machinery. If there is already a loan on it, a new transaction may pay off that balance and provide additional proceeds, depending on the value and permitted advance.
Here is a simple illustration. If equipment is valued at $1 million and a lender permits an $800,000 advance, paying off a $400,000 balance would leave $400,000 before fees and other closing costs. Those figures explain the mechanics. They are not an offer.
The actual result depends on valuation, equipment condition, ownership, liens and the lender's requirements.
Review the payment, not just the cash received
A longer term may change the payment substantially. It does not automatically reduce total cost, and it puts the equipment behind the obligation. We want to compare both the cash-flow benefit and the full cost of the new transaction.
We see potential uses for this conversation in manufacturing, distribution, construction, landscaping and land excavation. The common thread is substantial equipment with available equity.
Watch the video
Equipment Financing vs. SBA vs. Term Loans: Which Fits Your Business?
Let’s talk about your business
Before you assume another short-term product is your only choice, tell Tree of Life Funding what equipment you own and what you owe on it. Start at treeoflifefunding.com/apply.