Equipment Financing Equipment Loan a Game Changer for Backpack Company
Author: Casey Marie Long
Date posted: 10.16.23

When a specialty backpack company started in the early ’80s, they were a bit ahead of their time. The fitness and outdoor craze that would take over during later decades were in its infancy. Despite these obstacles, they found a solid customer basis of loyal local hikers.

As hiking and fitness became more mainstream, their revenue grew along with people’s willingness to venture into the outdoors. By 2015, they were bringing in $3 million in annual sales and employed 15 people, many of whom had been with the company for years.

 

In late 2020, a well-timed tweet by a celebrity made the backpacks suddenly trendy and a must-have item. But while their usual customers were willing to wait for their backpacks, new customers were turned off by the delivery times which were stretching further into the future.

Equipment Loan a Game Changer for Backpack Company

To increase their production capacity, they needed to purchase additional manufacturing equipment. This would enable them to produce more products. To purchase the equipment, the company needed $450,000. But they also needed to purchase more raw materials for production. Growth in business is good, but it isn’t always easy to fund. These two large expenses were more than their small operation could fund while maintaining a cash reserve.

 

Because of the specialized equipment needed to produce their goods, they tended to use their equipment for decades. Fortunately, they were able to find a piece of used equipment that could be adapted to create their product and could be moved to their manufacturing plant quickly. However, the company had to act swiftly and secure financing for the equipment.

Knowing that their equipment was unique to their business and with their long-term vision for the company, the company decided to purchase the additional equipment using an equipment loan. Upon contacting an equipment loan expert, they promptly submitted the necessary documents to obtain financing, including bank statements and a recent tax return. Within five days, they secured approval, and the manageable payment was made possible by the 5-year loan term.

 

The momentum started by the celebrity tweet and the shortened delivery times allowed the company to increase sales in 2021 by 30%. The company hired additional employees to meet the new demand. They also started investigating additional product lines to complement their hiking backpacks.

Equipment Loan a Game Changer for Backpack Company
About The Author | Casey Marie Long

Casey has 12 years of technical writing experience. She is also a CPA and bookkeeper. Casey graduated from the University of St. Thomas (Minnesota) with a B.A. in mathematics and currently resides in San Diego, CA.

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