Secured business loans for capital equipment?

Hammer · ‎10-02-2023

After opening a bunch of business credit cards, I realized they're not the best way to fund my rapidly growing business even if they have 0% intro APR. Chase and AmEx do not want to give me more credit since I already have high balances with them. The reason the balances are high is because 90% of my spending has been on equipment which takes ~1 year to pay for itself.

So I looked into equipment installment loans. I found several VC firms/banks who offer them, and they have personal and business requirements. I easily meet the personal credit standards. They seem to want at least 10k/month revenue for the last 3 months, which will take me until December to achieve. They also require invoices from distributors or vendors to make sure actual equipment is being ordered. The equipment I'm trying to buy are Nvidia RTX 4090 video cards, which I've been buying so far with eBay or from private parties with PayPal, but I guess I can find a few wholesalers.

Does anybody have experience with small business equipment loans? What are typical interest rates and is it easier to get higher loan amounts than business credit cards or unsecured operating loans? What kind of down payment do these lenders want? Obviously it's much better to front even 30% of the capital for these expensive GPUs instead of 100%. I could repay the credit cards at the very least by refinacing it to a lower interest secured loan.

sccredit · ‎10-05-2023

That looks like a component, not equipment in itself. Unless I am missing something?

Are you using them in a finished computer and then reselling? Simply flipping them? Equipment loans are normally used to purchase a piece of equipment that is used in the business to make money. A contractor might finance an excavator, a trucker a semi truck. How would these graphics cards be used?

WayneSki · ‎10-05-2023

@Hammer wrote:
After opening a bunch of business credit cards, I realized they're not the best way to fund my rapidly growing business even if they have 0% intro APR. Chase and AmEx do not want to give me more credit since I already have high balances with them. The reason the balances are high is because 90% of my spending has been on equipment which takes ~1 year to pay for itself.

So I looked into equipment installment loans. I found several VC firms/banks who offer them, and they have personal and business requirements. I easily meet the personal credit standards. They seem to want at least 10k/month revenue for the last 3 months, which will take me until December to achieve. They also require invoices from distributors or vendors to make sure actual equipment is being ordered. The equipment I'm trying to buy are Nvidia RTX 4090 video cards, which I've been buying so far with eBay or from private parties with PayPal, but I guess I can find a few wholesalers.

Does anybody have experience with small business equipment loans? What are typical interest rates and is it easier to get higher loan amounts than business credit cards or unsecured operating loans? What kind of down payment do these lenders want? Obviously it's much better to front even 30% of the capital for these expensive GPUs instead of 100%. I could repay the credit cards at the very least by refinacing it to a lower interest secured loan.

Equipment loans use the equipment you purchase with the loan as collateral incase of a default. So this may not work for what you're trying to do.