A computer equipment loan, is a way for businesses to get working assets by using their computer equipment as security.
Computer equipment is the type of collateral which depreciates the fastest. Whether the collateral will have much value, or any, will depend primarily on how old the equipment is. The equipment typically must be less than 90 days old and have significant value. In most cases full financial information must be submitted. The last 2 years business tax returns, interim financial statement will be required.
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When it comes to computer electronic equipment, especially desktop computers, laptops, and software, after 1-2 years, the value will have dropped dramatically. Values will drop possibly as much as 50% – 75% in that time and the amount of working capital that can be obtained in a loan against computer equipment, or computer equipment leaseback, will be substantially reduced.
If the lender were to repossess the collateral, employ an outside vendor to re-market the equipment, they will only get 10 – 20 cents on the dollar. This results in making the repossession of the collateral possibly not worthwhile to the lender and may lenders will not repossess the collateral.
As a result, in many cases, lenders will consider computer equipment almost an unsecured transaction, which has an impact on the credit review and approval process. If an applicant gets approved for a leaseback of computer equipment and makes at least half the payments, it is very likely the equipment will never be repossessed, even if there is a default after the halfway point.
Regardless of the risk and credit issues, computer equipment is a very realistic and unique funding options for almost all businesses. There are several reasons why a loan against equipment in the $10,000 to $50,000 range is very viable. More businesses have equipment than any other asset. More businesses will qualify for $10,000 to $50,000 in financing then will qualify for $100,000 to $250,000 in financing. These factors put more businesses in play for funding than any other secured funding program
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