Businesses must continually assess their technology solutions in order to stay competitive, increase market share and identify new revenue streams. In some cases, these businesses will find they need to financially invest in new tools and technologies that they simply can’t afford. So … what solution is available to keep these organizations afloat?
The answer, according to Dean Morrison, national business development manager at Summit Funding Group, is project-based financing. Morrison recently joined AAJ to discuss project-based financing during a webinar titled “The Dollars and Sense of Financing Technology Projects.”
In short, project-based financing involves the long-term financing of an IT project (including hardware, software, training and solution customization) based on its potential return on investment. In other words, instead of paying for the project equipment upfront in full, a business owner can repay an IT vendor for the technology on a gradual basis using the cash flow that the IT service or project generates after being implemented. It is in this way that project-based financing becomes an ideal way for business leaders to make necessary business improvements in a cost-efficient manner.
Project-based financing is, therefore, a very useful option for businesses short on cash to acquire the technology they need to stay competitive, to differentiate themselves and to drive profits. The loan enables companies to preserve cash flow, conserve bank lines of credit, reduce upfront expenses and bundle disparate project costs, among many other things, Morrison said.
As a matter of fact, investment in equipment and software will hit an all-time high of $922 billion this year—62 percent of which is expected to be financed, according to the Equipment Leasing and Financing Association.
Now that you know the basics of this popular financing model you can better answer the question of whether it would be right for your business. If you think so, then stay tuned to this series to learn how your organization can get started with project-based financing.