To stay competitive in the telecom industry, it’s important to ensure you have the right tools and equipment to get the job done efficiently and effectively — including bucket trucks and horizontal directional drills. But when you’re looking to upgrade or expand your current equipment, the high costs of these tools when purchased new can be prohibitive.
However, you can acquire the essential equipment your telecom business needs to grow and thrive in a highly competitive market without having to pay the full amount up front through telecom equipment financing.
What Is Telecom Equipment Financing?
Equipment financing is a type of loan used to purchase a piece of equipment used for business purposes. Depending on your lender and the terms of your agreement, your loan may provide 100% of the funds needed to purchase the equipment or only cover a portion of the total cost. Once you purchase the equipment, you pay back the money loaned in regular installments with interest over a fixed term. The equipment itself acts as collateral for the loan.
It’s important not to confuse equipment financing with equipment leasing. When you lease your telecom equipment, you never actually own the asset. At the end of your agreement, you must either renew the lease, return the equipment or purchase it from the leasing company. On the other hand, with equipment financing, once you pay off the loan and fulfill the terms of your loan agreement, your company will own the equipment, allowing you to build equity.
Telecom equipment financing is simply the application of equipment financing in the telecom industry. It allows you to upgrade your equipment, so your business can generate more income and, in turn, give you the cash flow boost you need to pay off the initial investment.
Here are two common use cases for telecom equipment financing:
How to Buy a Bucket Truck
Bucket trucks are a type of vehicle featuring an aerial lift used to elevate workers up to 50 feet in the air. They are used by telecommunications companies for the installation and repair of above-ground cables and cost several thousands of dollars.
To buy a bucket truck with telecom equipment financing, there are three basic steps:
- Identify the make and model of bucket truck you want to purchase. As with most vehicles and machinery, buying new will be more expensive than buying used. However, newer equipment may last longer and require fewer repairs than older models.
- Identify a lender who offers financing that meets your funding needs. Ideally, work with a lender who has experience with telecom companies and is willing to work with you to negotiate terms that meet the needs of both the lender and your business.
- Complete the application process. Reputable lenders will request documentation of your company’s financial and credit history. Many lenders require your business to have a certain credit score, but the specific number varies between providers. The time between application and approval can range from a few days to several weeks, depending on the lending institution.
Once approved, you will receive the funds needed to make your purchase under the terms you agreed to with your lender.
How to Buy a Horizontal Directional Drill
Horizontal directional drills are used to drill underground tunnels for cables, typically under waterways or other areas where digging an open trench would be impractical or impossible. They are essential for the installation and maintenance of underground cables but cost hundreds of thousands of dollars when purchased new.
Similar to the bucket truck example above, there are three basic steps to buying horizontal directional drills with telecom equipment financing:
- Identify the make and model of the horizontal directional drill you want to purchase. Ditch Witch and Vermeer are both brands used by ei Funding clients who have found them to be reliable equipment manufacturers.
- Identify a lender who offers financing that meets your funding needs. Once you’ve decided on your model, find a lender who offers financing to cover most or all of the purchase price.
- Complete the application process. If you meet the lender’s qualifications in terms of credit and financial history, you can move forward with financing the drill. From there, the process of purchasing the equipment and repaying the loan will be dictated by the terms of your agreement with your provider.
How to Finance Telecom Equipment
It’s important to find a lender who is both reputable and willing to approve your financing. Most equipment financing is done through banks, credit unions and online lenders and financing companies.
At ei Funding, we offer a form of equipment financing called Factoring+. Factoring+ works similarly to standard equipment financing. The primary difference is that you can pay back the initial purchase through participation in invoice factoring. Your new equipment will help your business to generate new invoices, a percentage of which will go toward the cost of your equipment. This way, you’ll have access to the new telecom equipment immediately without paying upfront or taking out a high-interest loan. Once you’ve settled the cost with your factoring company, it’s yours to own.
Learn more about how Factoring+ can help you get the telecom equipment you need to grow your business.