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As you build and grow your portable restroom business, you’ll need to invest in equipment — units, sinks, trucks, maybe even land and warehouse space. Depending on the size and frequency of these capital purchases, you’ll more than likely be utilizing some kind of financing.
What kinds of financing are available? Which option or options make the most sense for your business? These are the questions we want to help you answer. That’s why we put together this infographic to serve as a reference as you manage capital purchases for your business.
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How to Manage Capital Purchases
Bank Loan
What is it?
Funds loaned at interest by a bank for a certain period
What are the pros?
- Low, fixed interest rates
- Predictable monthly payments
- Helps build business credit
What are the cons?
- Lots of paperwork
- Long approval process
- Requires strong credit
How do you get it?
- Determine if you qualify
- Decide on the type of loan
- Compare lenders
- Gather documents & apply
Line of Credit (LOC)
What is it?
A flexible loan that consists of a defined amount of money that can be borrowed as needed
What are the pros?
- Funds can be accessed when needed
- Enables purchasing flexibility
- Helps build business credit
What are the cons?
- Qualifying can be difficult
- May come with a low borrowing limit
- Extra charges & fees can add up quickly
How do you get it?
- Review your credit score & finances
- Compare your options
- Check the requirements
- Calculate the costs
- Gather documents & apply
Commercial Real Estate Loan
What is it?
A mortgage secured by a lien on commercial property as opposed to residential property
What are the pros?
- Faster & easier approval process
- Shorter terms
- More room for negotiation
What are the cons?
- High interest rates
- Higher down payments and closing costs
- Not available to new investors
How do you get it?
- Identify a property & put it under contract
- Prepare your financial package
- Submit financial package for a quote
- Choose a loan product
- Due diligence & closing
Equipment Loan
What is it?
A loan used to purchase business-related equipment
What are the pros?
- No collateral requirement
- Flexible terms of repayment
- Total ownership of equipment once the loan is repaid
What are the cons?
- High interest rates
- Equipment could become obsolete or depreciate by the time the loan is paid off
- Usage is restricted to equipment
How do you get it?
- Review your credit score & finances
- Have a solid business plan
- Update your personal resume
- Gather cash flow statements/documents & apply
Asset-Based Loan
What is it?
A loan that uses existing company assets as security
What are the pros?
- Ownership of existing assets is maintained as long as you remain in good standing
- Makes capital immediately available
- Enables purchasing flexibility
What are the cons?
- High interest rates
- Assets are forfeited if you default on payments
- Doesn’t immediately increase the value of the company
How do you get it?
- Identify the assets you will offer as collateral
- Apply with a lender
- Make a preliminary commitment
- Go through an asset audit
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How to Manage Capital Purchases
Bank Loan
What is it?
Funds loaned at interest by a bank for a certain period
What are the pros?
- Low, fixed interest rates
- Predictable monthly payments
- Helps build business credit
What are the cons?
- Lots of paperwork
- Long approval process
- Requires strong credit
How do you get it?
- Determine if you qualify
- Decide on the type of loan
- Compare lenders
- Gather documents & apply
Line of Credit (LOC)
What is it?
A flexible loan that consists of a defined amount of money that can be borrowed as needed
What are the pros?
- Funds can be accessed when needed
- Enables purchasing flexibility
- Helps build business credit
What are the cons?
- Qualifying can be difficult
- May come with a low borrowing limit
- Extra charges & fees can add up quickly
How do you get it?
- Review your credit score & finances
- Compare your options
- Check the requirements
- Calculate the costs
- Gather documents & apply
Commercial Real Estate Loan
What is it?
A mortgage secured by a lien on commercial property as opposed to residential property
What are the pros?
- Faster & easier approval process
- Shorter terms
- More room for negotiation
What are the cons?
- High interest rates
- Higher down payments and closing costs
- Not available to new investors
How do you get it?
- Identify a property & put it under contract
- Prepare your financial package
- Submit financial package for a quote
- Choose a loan product
- Due diligence & closing
Equipment Loan
What is it?
A loan used to purchase business-related equipment
What are the pros?
- No collateral requirement
- Flexible terms of repayment
- Total ownership of equipment once the loan is repaid
What are the cons?
- High interest rates
- Equipment could become obsolete or depreciate by the time the loan is paid off
- Usage is restricted to equipment
How do you get it?
- Review your credit score & finances
- Have a solid business plan
- Update your personal resume
- Gather cash flow statements/documents & apply
Asset-Based Loan
What is it?
A loan that uses existing company assets as security
What are the pros?
- Ownership of existing assets is maintained as long as you remain in good standing
- Makes capital immediately available
- Enables purchasing flexibility
What are the cons?
- High interest rates
- Assets are forfeited if you default on payments
- Doesn’t immediately increase the value of the company
How do you get it?
- Identify the assets you will offer as collateral
- Apply with a lender
- Make a preliminary commitment
- Go through an asset audit
