When you are looking for business financing, one of the most important things to consider is your potential collateral. If you have assets that are sufficiently valuable, you will have a much easier time securing funding. To that end, investing in maintaining your assets can be a valuable way to help secure future equipment financing.
The Value of Good Equipment Maintenance
It is usually a best practice to incorporate equipment maintenance into your operational processes. However, you may not realize how substantial the impact can be. These are a few of the main benefits:
- Greater equipment uptime
- Reduced costs (fixes are usually more expensive than proactive maintenance)
- Improved efficiency
- Longer service life of equipment
- Enhanced value of equipment
These benefits, particularly the first three, can have a big impact on the day-to-day profitability of your business. If you are spending less to get more done, you will see better bottom-line results. For many organizations, the improved uptime alone is reason enough to take maintenance seriously.
However, it is the last two bullet points that really reflect the importance in terms of financing. Owning equipment for longer and having it be more valuable on the secondary market can make a huge difference when you want to secure an asset-backed loan.
How It Affects Your Financing Options
When you want to secure financing for your business, whether to buy new equipment or for other purposes, you will need the right collateral. Equipment can be a perfect fit for this. If the equipment you currently own is well-maintained, it can greatly increase your financing options. The equipment will be more valuable, and it will be attractive to more potential lenders.
Furthermore, if you finance your equipment purchase, it behooves you to keep it well-maintained. First, this will help to prevent you from getting underwater on the loan. If you keep its value well, it will consistently be worth at least as much as what you owe. Furthermore, if the service life of the equipment exceeds the term of the loan, you will avoid owing money on a piece of equipment you can no longer use.
Equipment maintenance is important no matter how you slice it. Investing in good maintenance practices and processes will help your business to achieve better financial results. Understanding how it impacts equipment financing will enable you to get more from your maintenance efforts. Learn more about this topic today.