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A hoist loan provides funds to a business that uses a hoist or hoist-related equipment. These loans are designed to provide the borrower with the funds necessary to acquire the equipment. This loan is usually a long-term loan because the equipment being purchased with the hoist loan proceeds depreciates over time. This is because a hoist is a form of capital equipment that depreciates in value.
Depreciating a Hoist Loan
Depreciation occurs over time where a piece of equipment loses value. The period of time in which the equipment is in service is known as its useable life. Because hoist machines are expensive pieces of equipment, a business would like to be able to recoup its investment in the purchase or financing of the hoist machine. The depreciation allows the business to write down a portion of the loan’s costs as an expense on the business’s books and records. As the useable life of the die cutting machine reaches zero, presumably the business has deducted the entire cost of the loan.
Hoist Loan Rate of Interest
The rate of interest that a borrower pays for a hoist loan is based on the credit rating of the borrower. This interest rate will be stated in the loan agreement between the borrower and the lender and will be lower for good credit risk and higher for low or poor credit risks. A borrower that wishes to take out a hoist loan should check with the lender to determine their qualification for a loan and the applicable rate in which they qualify.
Credit is the lifeblood of your business, especially for small or new startup companies. BusinessFinance.com assists entrepreneurs to get started purchasing equipment, building your inventory and expanding your business.
Some important items to know to finance your are:
- How much money do you really need?
- Do you know your exact FICO scores?
- How do you plan to repay the loan?
- Who is going to borrow the money? You personally or another legal entity?
- What assets can you pledge to secure your loan?