Posted on: May 24, 2022 | Investing
You’ve decided to grow your vending business and invest in new machines or machine upgrades. You might be wondering how you can finance investment in your business. Maybe you’re considering loans, or maybe you’re looking for alternatives. Let’s take a look at the ways to finance investment in your vending business, including traditional and creative options.
7 Ways to Finance Investment in Your Vending Business
1. Business Loans
Business loans are one of the most common options for financing investment in your business. You might work with your bank, a new lender, or the U.S. Small Business Administration. You’ll need to present important information about your business, including your revenue, the value of your assets, the value of the new investment or improvements you want to make, and more.
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This can be a risky strategy, but it can also be ideal for entrepreneurs that don’t want to take on a loan. You might use personal savings, a retirement account, or another account. Use this strategy with caution, and do as much research as you can to determine how viable or risky your business investment is likely to be. This way, you can invest with confidence and refill your savings when your new machine or upgraded machine increases revenue.
3. Personal Loans
Loans from friends and family can give you an alternative way to finance investment in your vending business. With the right precautions and planning, this can be a successful endeavor for you and your friends and family. Be honest and clear about the amount you need and your plans for payback. It’s ideal to get this agreement in writing, so there’s no confusion or frustration later on.
4. Leveraging Depreciation
One creative way to finance investment in your vending business is through a depreciation deduction on your taxes. Section 179 of the Federal Tax Code allows businesses to deduct depreciation from their tax liability. Since business assets lose value over time, businesses can subtract this loss from their revenue, and pay less taxes. Using Section 179, you can deduct the overall depreciation of a vending machine at one time, instead of depreciating the investment over a number of years.
With the right timing, you can reduce your taxes and use this extra revenue to finance investment in additional vending machines or upgrades. A Section 179 Calculator can help to show what deductions you might expect. Talk to a tax expert to see how to use the depreciation deduction properly.
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Crowdfunding, as the name suggests, leverages the power of a large group of people to finance a project. Crowdfunding has been instrumental in launching a wide range of projects, from business ventures to video games to consumer projects and much more. This method for financing your business investment requires a level of popularity and reach. You might achieve this online, as many others have done, or you might crowdfund organically, using microloans or gifts from numerous people you know.
If you’re looking to finance investment in your vending business and you’re also looking for a bit of assistance in running your business, a partnership might be a great avenue for you. You might work with a friend, family member or another business owner to add a vending machine and share the profits. In this case, a clear partnership agreement will be important, outlining the division of labor, responsibilities, revenue, how to exit the agreement, and more.
7. Personal Assets
Some people save money in savings accounts, while others might invest in other assets. This can include a wide range of things, from big-ticket items like property or vehicles to smaller items, like collectibles. If you aren’t getting the same enjoyment out of your assets as you once were, or you’ve been waiting to use these assets for the right opportunity, growing your business might be just what you’re looking for. Once again, be sure to do your research and assess risk, so you can plan for success.
You can use the equity in your machines to finance a new machine or machine upgrades. Ascentium offers flexible financing options up to $2 million for new business equipment and upgrades, including vending machines. Ascentium has provided business with over $7 billion in total capital, and uses a streamlined process to help business owners get credit decisions in as little as one or two hours. This may be a good option for you, especially if you’re looking for alternative options from traditional banks. You can calculate your payments and potential tax savings using Section 179 using this calculator.
There are many ways to finance investment in your vending business. Whether you’re looking for a traditional route, such as a bank loan, or you want to leverage your personal assets or relationships, be sure to plan carefully and make your plan clear to everyone involved. This way, you’ll have a clear path forward and you’ll be able to invest in your business with confidence.
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