Investing Finance an ATM Business is a good business idea as it provides a leveled revenue with minimum effort and expense. However, getting the means to finance the purchase of an ATM machine may be a problem if you are just starting the business. In this guide, let’s know which loan and non-loan funding methods you can utilize to start your ATM business dealership with or without any amount invested.
Understanding the ATM Business Model
ATM business is quite crucial to comprehend before the consideration of funding methods for an ATM business. The business of owning and operating an ATM is as simple as buying a machine and installing it at some conspicuous place like supermarket or retail and fuel station. This way your business makes money as customers withdraw cash and you are paid transaction fees or surcharge fees.
How Much Does It Cost to Start an ATM Business?
Starting an ATM business involves a few key expenses:
- ATM Machine: Based on the model, getting an ATM machine ranges from $2000 to $10000, based on the model.
- Installation & Setup: The first time it takes to be set up and installed could cost $200-$500.
- Monthly Operating Costs: If you are leasing your ATM, you may be paying between $50 and $250 monthly payment. Other operating expenses are being manufacture of $50 – $100 on machines and transaction charges.
It has been estimated that on the average an ATM machine earns between $200–$3,000 per month depending on its location and the traffic.
Financing Options for Your ATM Business
1. Traditional Bank Loans
The simplest of all the funding sources that an ATM business might need is through the usual bank loans. Small business owners may borrow from $10,000 to $100, 000 from banks. To come for a loan, one has to present good credits, that is a credit rating of over 650 and a good business plan showing your income estimates and cash flow.
- Interest Rates: Usually charge between 5% and 15% of the face value depending on the credit rating of a cardholder.
- Loan Terms: Terms of bank loans usually last for 3 to 5 years.
Whereas conventional loans may be rather suitable for a veteran businessman, beginners will find it very challenging to get approval without ample credit history.
2. ATM Leasing
If you do not want to invest on an outright basis on an ATM leasing can be ideal for you. When considering getting an ATM, you get to farm out which means that instead of having to part with a big sum of money you have to pay a monthly fee. Leasing rates are usually between $50 -$250 monthly depending on the kind of machine and the terms of leasing.
- Pros: Costs may be subdivided into initial costs, and lower maintenance and servicing, and there are no dangers associated with possession of the machines.
- Cons: Besides, leasing could be more expensive in the long run than purchasing an ATM and you do not own the machine.
Leasing is suitable for those newbie ATM business owners who wish to explore what it will take to make the next step in purchasing more sophisticated ATM machines.
3. Alternative Financing (Peer-to-Peer Lending & Private Loans)
Another solution is to use non-collateral financing, such as services involving the issuance of money at a high interest rate with their friends and relatives, including the issuance of private loans. These are more negotiable than the foregoing and may not require as many qualifications as the bank loans.
- Interest Rates: Often extend between 8% and 25% based on the particular financing company.
- Loan Amounts: Usually the bonds cost anything between $5,000 and 50 thousand.Collateral: Some of the nontraditional lenders may insist on a guarantee for the loan to be issued out.
This option is particularly advantageous for the clients who are rejected by conventional bank loans because of credit or no business history.
4. Financing with Little to No Money: Partnering with Investors
If you do not have enough capital to fund ATM business, you can seek to tap the services of investors as a means of starting the business. This is finance can be provided by the investors, who contribute the cash necessary for the purchase of the ATM machines, and then they receive part of the profits of your business.
There is also revenue sharing where an investor will fund your business but you will make a payback by providing him with a certain percentage of your revenue profits.
The other possibility is to offer own valuables (for instance, house or savings) as a guarantee. If you are in a situation that you’re having more of assets than cash flow then this could be worth trying.
Important Considerations Before Seeking Financing
Before applying for financing, there are a few key factors to consider:
- Credit Score: By having a higher credit score you are likely to get the best deals in terms of financing. When your score is low brace for expensive rates.
- Location: The success of your ATM business mostly depends on the areas where you place your machines. Locations with high customer traffics such as malls, gas stations or bars would likely to post more transactions.
- Cash Flow Projections: As for the requirements to the sources of financing, be sure to provide realistic expectations as to much revenue each occupied ATM will generate monthly in order to cover the loan and other costs.
Conclusion
The initial investment required to own an ATM business can be a strong type of a passive income business if you consider it, but financing remains a problem for most business owners. This means that regardless of whether you favor conventional loan means, leasing or seeking out investors to finance your endeavor, there is a solution you can embrace.
