Enough Already? Determining how much money you need for an equipment loan
By Doug Hood
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Q: To fulfill acontract my business just landed, I must buy new equipment. How canI be sure I borrow enough money from the bank?
A: There are a lotof things to consider when approaching the bank about an expansionloan. And if you don't ask, you won't get. So add up allthe potential costs-such as closing costs, installation feescharged by the vendor to put in the equipment, construction coststo integrate the equipment into your plant, and working capitalneeded to support the expansion prior to getting paid by thecustomer and the like.
Work closely with your accountant to calculate the costs andestimate the capital you need to grow your business. Take thisinformation to your lender, and ask him or her to help youstructure a loan that meets your cash-flow needs. Get as much asyou can upfront, because it's easier to get cash the first timethan to go back for a supplemental loan.
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