Latest news with #collateral
Yahoo
20 hours ago
- Business
- Yahoo
Pros and cons of equipment loans
Equipment loans can be used to purchase large assets for lower rates and easier approval than unsecured loans. Equipment loans are easy to qualify for and are offered through a variety of bank and online lenders. If you fail to pay your equipment loan on time, the lender may seize the equipment to recoup their loss. If you don't have thousands of dollars in the bank to buy business equipment, then an equipment loan can get you what you need. Equipment loans can finance office furniture, point-of-sale systems, trucks, cars, farming machinery and more, making them a versatile option for business owners looking for funding. The equipment you finance also acts as collateral, lowering your borrowing costs and making your application more appealing to lenders. As such, equipment loans can be a good option if you have a lower credit score or low time in business. According to the Federal Reserve Banks' 2024 Small Business Credit Survey, 68 percent of auto or equipment loan applications were fully approved, the highest approval rate of any loan type. While equipment loans can help companies purchase essential machinery or equipment, it's important to consider the pros and cons of equipment loans before signing on the dotted line. Flexible financing Lower approval requirements Credit-building opportunities Built-in tax breaks Ownership instead of renting Limited to financing equipment May require a down payment Loan could outlast life of equipment Maintenence costs extra Lender can seize the equipment if you default If you need to acquire equipment for your business, there are lots of pros to using an equipment loan. Equipment loans can be used to fund a variety of equipment types, from computers to construction equipment. This type of financing also saves you from having to tie up large sums of cash purchasing equipment. With a loan, you spread the cost over the life of the loan, which can be anywhere from three and 10 years. Longer terms can mean lower monthly payments, though with the interest rate, you may end up paying more interest overall. Many lenders offer relatively quick funding for equipment loans, especially if you go with an online lender. You may be able to receive funds in as little as 24 to 48 hours. Banks may take up to a week to approve funding, though their underwriting process is faster for this type of loan than with unsecured loans. Getting any kind of loan can help your company build credit, but an equipment loan is one of the easier ways to start building credit. They're usually easy to qualify for, even if your company has no operating history. Just be sure to make your payments on time to avoid any hits to your credit. Section 179 of the IRS tax code allows you to write off the total cost of the equipment or machinery the year you bought it, even though you're making payments and don't yet own it in full. Depending on the equipment value, this can result in considerable tax savings. Starting in the tax year 2024, the maximum section 179 expense deduction is $1,220,000, and the total equipment value for the 2025 tax year is $3.13 million. Leasing equipment is like renting, you pay to borrow it but then have to return it without getting any of the investment benefits. When you finance business equipment, you get to keep it even after paying off the loan. This is especially beneficial for equipment that will last longer than your loan term, such as office or restaurant furniture and farm equipment. Bankrate insight Equipment leasing is a common alternative to equipment financing. It involves renting the equipment from the leasing company for a specific term. Leasing can be beneficial because it often comes with a lower monthly payment and lower or no down payment. However, you won't own the equipment at the end of the lease unless the lease comes with an equipment buyout option. Before getting an equipment loan, you have to consider the drawbacks before applying. Equipment financing is limited in use. You can only use it to purchase or repair equipment and only equipment that the lender agrees is adequate to serve as collateral. If you need funding for other purposes, you'll have to look at other types of business loans. Many equipment loans require a down payment of as much as 20 percent of the equipment's cost. If you're buying expensive equipment, you might need a lot of cash, or you may have to look into leasing if you can't afford a sizable down payment. There's a chance, especially if you get a long-term loan, that the loan will outlast the equipment you purchase. For example, if you get a 10-year loan, but the equipment breaks after five years, you're stuck with five years of payments for something you can't use anymore. Even if it doesn't break, it may still wear out, become less useful, or become obsolete. Before signing for equipment financing, make sure the equipment is in good shape and will outlast your loan term. You could also look into getting a warranty or insurance on the equipment to cover major repairs, extending its usable life. Just like financing a vehicle, you're still responsible for maintenance costs and repairs if the equipment breaks down while you're making payments on the loan. Though some maintenance is routine and expected, the equipment may break down at any time, increasing the overall cost of owning it. If you fail to make payments and default on the loan, the lender has the right to seize the equipment and sell it to recoup the loan cost. You will lose all the value that you invested into the equipment. To avoid this scenario, ensure that you can easily manage loan repayments, fitting the repayments into your business budget. If your business revenue takes a hit during the loan and you think you'll miss a payment, contact the lender to see if they will work with you. An equipment loan makes sense for your business if: You can't afford to buy equipment outright You want to own the equipment at the end of the loan You're looking for the lowest overall loan costs You want to keep liquid cash on hand for other business needs You're willing to use the equipment as collateral for the loan If you don't want to use the equipment as collateral, you may be better off with other business loans, like an unsecured term loan or a line of credit, though this can come with higher interest rates and approval requirements. If you don't have great credit, such as a 500 personal credit score, you might look into alternative financing, like a merchant cash advance. Whether you finance your equipment purchase depends on how much capital your business has and how much extra you're able to pay for equipment purchases. Many businesses use an equipment loan to help them keep cash reserves and cash flow within their business, paying off the equipment in small increments. If you have plenty of capital, you could save money on interest by buying the equipment outright. Equipment financing is flexible and widely available, even for startups and businesses needing bad credit financing. Shop around to compare equipment loans from a few sources to ensure you get the best rate and lowest fees. You can also compare equipment loans with other top loans on the market to make sure you're choosing the best option. What credit score do you need for equipment financing?One of the benefits of equipment financing is that it's easier to qualify for than other loans. Each lender will set its own minimum credit score requirements, but a minimum personal credit score of 600 isn't unusual. Keep in mind that a credit score is just one factor lenders consider. They'll also examine your revenue, operating history, down payment, and other factors. What equipment can be financed?You can finance almost any equipment for a business, from heavy equipment to storage tools to IT systems. Examples include cranes, excavators, trucks, servers, software, computers, food packaging tools, industrial coolers and box makers. How hard is it to get an equipment loan?Equipment loans are typically not hard to get. You can qualify for one with moderate credit and a sufficient down payment, even if you're running a startup. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Finextra
a day ago
- Business
- Finextra
Coinbase is working with Nodal Clear on using USDC as collateral for futures trading
Coinbase Derivatives and Nodal Clear are partnering to integrate USDC as collateral for US futures trading, working with the CFTC to bring this to market. 0 This is expected to be the first regulated use case of USDC as collateral and will leverage Coinbase Custody Trust as the custodian. As part of a multi-year renewal agreement, Coinbase Derivatives, LLC, a CFTC-regulated designated contract market, and Nodal Clear are partnering to integrate USDC as eligible collateral for futures targeting next year. This will mark a meaningful milestone in our push to establish USDC as a true cash equivalent, while also offering increased efficiency through near-instant money movement and secure custody. This also underscores USDC's reliability, operational advantages, and growing acceptance in traditional financial markets. Nodal Clear is a CFTC-regulated derivatives clearing organization, which is part of EEX Group, a Deutsche Börse company. As one of the most trusted stablecoins with transparent reserves and strong regulatory oversight, USDC aligns seamlessly with Nodal Clear's rigorous risk management framework, making it a natural fit for inclusion as eligible collateral. This is a significant advancement in the growth of our continued partnership with Nodal Clear. 'Our commitment to integrate USDC as collateral reflects our dedication to enhance trading capabilities for US market participants, improve operational efficiency through almost instant money movement, and ensure secure custody via Coinbase Custody Trust, a Qualified Custodian regulated by the New York Department of Financial Services.' - Boris Ilyevsky, CEO, Coinbase Derivatives, LLC 'Working with Coinbase Derivatives, we are excited to continue our relationship and provide innovation to the industry, such as our introduction of the first 24x7 margined futures in May 2025. The plans to integrate USDC as collateral represent our continued commitment to seek to be responsive to market needs and innovate. We look forward to engaging with our clearing members and the CFTC in seeking to make this a reality' - Paul Cusenza, Chairman and CEO, Nodal Clear As markets continue to evolve, stablecoins address a growing need for a more flexible and modern financial ecosystem. US regulators and legislators are making meaningful strides to support this new wave of innovation, evidenced by Congress's momentum toward passing landmark legislation that would affirm the cash equivalence of USDC and the CFTC's ongoing efforts to advance the recognition of stablecoins. The CFTC's Global Markets Advisory Committee, sponsored by current Acting Chairman Caroline D. Pham, on November 21st, 2024 advanced a recommendation to expand the use of non-cash collateral through the use of distributed ledger technology. The heightened focus and continued progress of regulators is paving the way for widespread adoption of USDC. Coinbase is proud to drive the next chapter forward with USDC at the core of revolutionizing the global financial system. Why USDC? USDC is a fully-reserved US dollar-backed stablecoin co-founded by Circle and Coinbase. As a regulated and widely adopted digital dollar, USDC enables near instant transactions and has become foundational infrastructure across both centralized and decentralized financial platforms. Its reliability and compliance-first framework make it uniquely suited for integration into traditional financial markets.
Crypto Insight
a day ago
- Business
- Crypto Insight
Deribit, Crypto.com integrate BlackRock's BUIDL as trading collateral
Crypto derivatives exchange Deribit and spot exchange are accepting BlackRock's tokenized US Treasury fund as trading collateral for institutional and experienced clients. The move will allow institutional traders to use a low-volatility, yield-bearing digital instrument as collateral for their accounts, lowering the margin requirements for leveraged trading, according to Forbes. Coinbase, one of the world's biggest exchanges by trading volume, announced a $2.9 billion deal to acquire Deribit in May 2025. The deal can expand the utility of BlackRock's Institutional Digital Liquidity Fund (BUIDL). The fund holds nearly 40% of the tokenized Treasurys market share, or roughly $2.9 billion in value locked, according to data from Tokenized US Treasury products are slowly emerging as an alternative to traditional stablecoins, thanks to their yield-bearing properties. The growth of these products reflects the broader merger of cryptocurrencies with the legacy financial system. Tokenized yield-bearing government securities proliferate as centralization risks grow BlackRock tipped plans to integrate BUIDL as a collateral asset across crypto derivatives platforms and centralized crypto exchanges, including OKX and Binance, in October 2024. In January 2025, the community governing Frax Finance, a decentralized finance (DeFi) protocol, voted to add support for BUIDL as backing collateral for the Frax-USD stablecoin (frxUSD). Proponents of the integration characterized BUIDL as beneficial, providing deeper liquidity, transfer options and lower counterparty risk from using a collateral asset created and backed by the world's largest asset manager, BlackRock, with around $11.5 trillion in assets under management. Despite the positive outlook from the Frax Finance community and other digital asset platforms, centralization concerns and the possibility of structural financial risk persist among industry executives and market participants. Six firms, including BlackRock, Franklin Templeton, Ondo Finance, Superstate, Centrifuge and Circle account for over 88% of the tokenized US treasury market. Most of the US Treasurys currently onchain were tokenized on the Ethereum network, which continues to be the leading blockchain for real-world tokenized assets. Ethereum holds $5.7 billion of the total $7.3 billion in tokenized government securities. Source:
Yahoo
2 days ago
- Business
- Yahoo
Where can I get an equipment loan?
You can find equipment loans from traditional banks, online lenders and even equipment manufacturers in some cases Traditional banks offer low interest rates and high loan amounts, while online lenders can fund your loan quickly and approve businesses with subprime credit. If you can't get approved for an equipment loan or need an alternative, consider a business line of credit or equipment leasing instead Many businesses need equipment to perform their work and deliver products to customers. But if your small business doesn't have the cash to drop on new equipment, an equipment loan can provide the funding you need. Essentially, an equipment loan is a term loan that uses the equipment as collateral. The good news is that you can find equipment loans from every type of lender, from traditional banks to SBA or online lenders. Traditional lenders like banks and credit unions offer low starting interest rates and long repayment terms if you get an equipment loan through them. While typically their eligibility requirements are strict for business loans, traditional lenders are more likely to approve equipment financing. The reason is that equipment loans are secured by the equipment as collateral. The lender can seize the equipment to repay the loan if needed, making this type of loan less risky for the lender. Traditional lenders may also offer SBA loans, like the 504 loan, which is designed specifically for buying commercial equipment. The SBA limits interest rates and offers long repayment terms of up to 10 years for 504 loans. Lender Loan amounts Repayment terms Key features Bank of America From $25,000 Up to 5 years Rates as low as 6.50% 2 years in business required 0.50% origination fee U.S. Bank Up to $2.5 million 24 to 60 months No down payment Get up to 125% of equipment's cost 2 years in business required TD Bank Not disclosed Not disclosed 13+ loan or lease options Express approvals for loans under $250,000 Wells Fargo From $100,000 12 to 84 months, depending on equipment type Up to 100% financing Seasonal payments Offers leases Most traditional banks offer equipment loans with competitive interest rates, but you need to be an established business to qualify. Pros Low interest rates. Traditional banks tend to keep interest rates lower than online lenders, especially since this is a secured loan. In-person support. Traditional lenders have local branches where you can meet with a banker face-to-face. May offer SBA 504 loans. Many traditional banks are SBA-approved or preferred lenders. You can find an approved lender through the SBA's lender match tool. Cons May not accept bad credit. These lenders typically have strict eligibility guidelines, like a credit score of 670 or higher, so they don't take on extra risk. Typically requires two years in business. Most banks don't approve businesses with under two years in business, excluding startups from getting funding. Potentially long applications. Traditional lenders tend to have multiple-page applications and require a long list of documents. And going in person or sending in paperwork can drag out the process. Bankrate insight As of June 2025 for the fiscal year, the SBA has: Approved 4,442 SBA 504 loans, providing over $5 billion in funds to small businesses More than 51% of approved loans were between $500,000 and $2 million The states with the highest amount of funding were California, Florida and Texas Most of the funding for SBA 504 loans goes to businesses over two years old (79.5%), but 14.7% of approved 504 loans were awarded to startups Online lenders tend to relax credit score requirements for an equipment loan to a 500 to 600 personal credit score, compared to traditional lenders that require strong credit. Online lenders may also specialize in equipment loans and accept startup businesses. However, expect loan amounts to be lower than traditional banks – such as $500,000 – and if you don't have good credit, the interest rates quoted may be high. Some online lenders specialize in financing specific types of equipment like semi-truck financing. These lenders may offer specialized loan options catering to their industry. For example, CAG Truck Capital offers engine overhaul financing so that owner-operators can finance work done to their truck's engine. These lenders often accept startups and bad credit borrowers, making them an accessible option. Lender Loan amounts Terms Key features Balboa Capital Up to $500,000 24 to 60 months Same-day funding available Loose eligibility requirements At least one year in business required National Funding Up to $150,000 24 to 60 months Rates as low as 4.99% (simple interest) 6 months in business required Leases with a lowest payment guarantee SMB Compass $25,000 to $5 million Up to 10 years Rates from 5.99% Funds in 24 to 48 hours Taycor Financial Up to $400,000 4 to 60 months Rates from 6.75% to 40.00% 100% financing available Accepts bad credit Triton Capital $10,000 to $250,000 12 to 60 months Rates from 5.99% to 24.99% Flexible payment schedules Funds within 48 hours Online lenders are more welcoming to business owners with bad credit, but they may offer a higher interest rate to offset your credit risk. Pros Welcomes risky borrowers. Some online lenders accept business owners with a credit score of 500 to 600. They're also more welcoming of startups with less than two years in business. Fast applications and funding. Online lenders often streamline their applications, providing funds quickly within 24 to 48 hours. More likely to offer no down payment. Many fintechs offer 100 percent financing, while banks like borrowers who can make a down payment of 10 percent to 20 percent. Cons Potentially higher rates. While starting rates are similar to banks, online equipment loans can quickly rise to a 40.00 percent APR or more. Not likely to offer SBA 504 loans. Most fintech lenders aren't SBA approved and don't offer SBA 504 loans. In some cases, you may be able to get an equipment loan through an equipment manufacturer. If you finance through a manufacturer, you get the benefit of buying and financing commercial equipment in the same place. Manufacturers may partner with a lender to offer financing. If so, you may want to compare the loan with other equipment loans to make sure you're getting the best deal. Pros Fast funding. You might be able to receive funding as soon as the same or the next business day after the loan is approved. Often works with bad credit. Manufacturers may accept a variety of credit levels, including bad credit. Offers convenience. You get the convenience of buying and financing your equipment all in one place. Cons Only offers equipment loans. Specialized lenders typically offer only equipment loans. If you need another type of loan, you'll need to look into getting that loan with a different lender or bank. May not be a recognizable brand. When working with a manufacturer, you may have never heard of the lender, making it harder to trust the lender with this financial relationship. Equipment loans are one of the easiest types of business loans to qualify for. According to the 2024 Small Business Credit Survey by the Federal Reserve Banks, auto and equipment loans have an 85 percent approval rate, the highest rate of any other business loan. However, equipment loan requirements do vary by the type of lender you choose. Typical requirements include: Time in business: One to two years Minimum credit score: 550 to 650 Annual revenue: $100,000 to $250,000 Down payment: 10 percent to 20 percent If you don't qualify for an equipment loan or need more flexibility to use the funding for different purposes, try one of these options for buying equipment: Term loan. Like equipment loans, term loans pay out a lump sum and have fixed repayments. But this loan may have longer repayment terms and may not require you to secure it with collateral. Business line of credit. A line of credit lets you borrow funds up to a predetermined credit limit anytime once you're approved. You only pay interest on the amount withdrawn. Then, as you repay the loan, the credit limit replenishes so that you can borrow again as needed. Equipment leasing. A lease can help you get equipment without as much upfront cost, such as no down payment. It can allow you to get newer equipment than if you were to finance, and it often comes with maintenance included. Some leases give you the chance to buy the equipment at the end of the term. SBA 7(a) loan. The SBA 7(a) loan is the most common SBA loan available. You can use the funds for general purposes like buying equipment. The SBA guarantees up to 75 percent of the loan, compared to just 40 percent for 504 loans. Merchant cash advance. A merchant cash advance grants funds based on future debit or credit card sales. MCAs tend to accept bad credit businesses and allow you to use the funds for any expense. However, beware: the daily or weekly repayment schedule and high fees can make it challenging to repay the loan. As a secured business loan, equipment loans offer low interest rates and lenient eligibility requirements no matter where you get the loan. But traditional lenders tend to offer the lowest starting rates for creditworthy businesses. Online equipment loan lenders are more accepting of startups and owners with bad credit and can provide funds within a few days. Your choice of lender really comes down to which benefits your business is looking for with a lender. What credit score is needed for an equipment loan?Many lenders have lenient credit score requirements of 600 for equipment loans, while some drop even lower to the 500s. Lenders can accept higher-risk borrowers because the loan is secured by the equipment. If you get a loan with a traditional bank, you may need a credit score of at least 670. What is a good interest rate for an equipment loan?Equipment loans often start around 6 percent, which is a good interest rate for creditworthy business owners. But average rates for bad credit can get up to 40 percent. Where can you find equipment loans?Most banks offer business equipment loans with competitive rates, while online or direct lenders may offer equipment loans with no down payment and funding in as little as 24 hours. Repayment terms stay in the same range for these types of lenders.
Forbes
2 days ago
- Business
- Forbes
Major Crypto Exchanges To Accept BlackRock's $2.9 Billion Tokenized Money Market Fund As Collateral
Riobert Mitchnick (left), head of digital assets at BlackRock, and Michael Sonnenshein, COO at Securitize For years, crypto traders posting collateral on exchanges have faced a tough tradeoff: use stablecoins like USDC or tether, which are, well, stable but pay no yield, or roll the dice with volatile assets like bitcoin and ether, risking a double hit when markets turn south: losses on your trade and on the collateral backing it. Collateral plays a critical role in crypto. It's the security deposit behind leveraged bets, ensuring traders can cover their losses when things don't go their way. But until now, the options were limited: stable but idle, or productive but unpredictable. Now, there's a third way. BlackRock's BUIDL, the asset manager's first money market fund issued on a public blockchain in partnership with tokenization specialist Securitize, will become accepted as collateral on and Deribit, two of the industry's largest exchanges. That means institutional and experienced traders of these platforms can now post a yield-bearing, blockchain-native version of U.S. Treasurys to back trades. Because BUIDL is both less volatile and income-generating (it currently pays around 4.5% annually), exchanges can offer lower minimum collateral requirements, freeing up more capital for traders to deploy elsewhere. 'This is a major turning point,' says Michael Sonnenshein, COO at Securitize. 'We're really starting to see not just the emergence but a real solidification of tokenized securities becoming a challenger to stablecoins as the common denominator across the crypto ecosystem. They're now becoming what we would consider programmable productive capital, as opposed to just a passive investment instrument used for yield or a safe place to park capital.' Since its launch in March 2024, BUIDL has grown to $2.9 billion in assets. Its largest holders include Ondo Finance, which tokenizes real-world assets, and Ethena Labs, the creator of the USDe stablecoin. which says it serves over 140 million users globally, will make BUIDL available as collateral to institutional clients in select jurisdictions across its full suite of services, including spot, margin, derivatives, and OTC trading, according to President and COO Eric Anziani. Deribit, the largest crypto options exchange with over $1.1 trillion in volume in 2024, will allow institutional clients to post BUIDL as collateral for futures and options trading, and make it available on its spot exchange. Historically, most of collateral on Deribit has been denominated in bitcoin. 'In the end, it boils down to choice and efficiency,' says the exchange's CEO Luuk Strijers. '80-85% of our business is institutional, and we are getting more of these traditional firms that don't necessarily hold a lot of crypto but hold a lot of dollars and don't want to miss out on yield.' The integration could also accelerate adoption across the industry. Coinbase, the largest crypto exchange in the U.S., is in the process of acquiring Deribit for $2.9 billion. So BUIDL could soon be available across Coinbase's broader ecosystem, bringing tokenized Treasurys even deeper into the crypto trading stack.
