How to Get Heavy Equipment Financing

Built To Help You Grow

How to Get Heavy Equipment Financing

August 19, 2017 Equipment Financing Equipment Leasing 0

Heavy Equipment Financing

It is both necessary and beneficial for any business to update older or out of date equipment, add to an existing inventory or replace various pieces of equipment at some point. Most business owners however, are faced with the challenge of financing such projects on their own, which in most cases can be difficult to come by, so they opt for loan facilities. Heavy equipment financing, also known as equipment leasing, machinery financing, small business equipment financing, or construction equipment financing, is the solution which business owners seek for replenishing the deficit in their working capital that has been budgeted for the outright purchase or leasing of equipment. Examples of such heavy equipment include, but aren’t limited to cranes, tractors, bulldozers, dump trucks, backhoes, excavators, concrete pumps, loaders, motor graders, skid steer loaders, telehandlers, compactors, and so many more.

While traditional loans are a great way to get the cash to quickly replace, refurbish, repair or update an equipment, the time it takes to apply for the loan, process the application and wait for a decision to be made can be a huge strain on most business owners. Luckily, there are several nontraditional lenders available that specialize in providing heavy equipment financing for business owners in need of a lifeline for their businesses.

As a business owner, you can rely on these nontraditional lenders to help you secure heavy equipment financing facilities whenever the need arises. Having a solid equipment financing plan in place will enable you maintain some degree of liquidity while literally moving your business forward. It is a very valuable service that could mean the difference between success and failure of your business, and should therefore not be left ignored.

The benefits of applying for heavy equipment financing to a business are numerous. Some of these benefits include:

Heavy Equipment FinancingLow interest rates

Businesses that apply for equipment financing normally get to enjoy low interest rates of 4-9% from nontraditional lenders who specialize in heavy equipment financing. Interests may vary depending on the lender you choose to borrow from but they are generally low compared to MCA loans.

Quick processing

The amount of time it takes to apply and get approval for an equipment loan is generally very fast. Most nontraditional lenders respond to requests within a day while others respond in minutes depending on the margin of equipment financing requested and the level of verifying the authenticity of the information provided.

Flexible payment schedule

Borrowers can also take advantage of the flexible payment options offered by lenders. Depending on the lender and the type of loan you secure, you can choose from making either daily or weekly payments on your heavy equipment loans while continuing in the running of your business. You can also enjoy longer payback periods of up to 84 months depending amount of money borrowed, credit score and type of equipment being financed.

100% Tax deductible

According to Section 179 Tax Deduction, borrowers can enjoy special tax deduction as an “operating expense” for their equipment loan payments. You will need to confirm the specifics of the terms from your lender and a business tax attorney to be sure.

Steps to Securing a Heavy Equipment Loan

Heavy equipment loans are a vital resource to the business owner and can be readily accessed through nontraditional lenders. To qualify for a heavy equipment loan, you will have to meet certain criteria as stipulated by the lender. Most lenders however, generally require the following criteria to be met before granting heavy equipment loans to borrowers:

Good Credit Is Important But Not

This is an important requirement that you must have before applying for any equipment loans. Typically a 620+ credit score is required on most equipment financing deals but if you have less don’t let that detour you from submitting an application for approval.  By all means, do well to ensure that your credit is in good shape. Having a history of bad credit, late credit card payments or defaulting on some loans will definitely make it more difficult to secure a loan application and getting approved. Be well prepared and do diligent research ahead of time, know your FICO score, fix any credit reporting errors and ensure that everything in your credit report is accurate. This will help you secure the lowest rate possible.

You Must Have A Solid Business Plan

Lenders will sometimes request to go through your business plan to see what is  you have in store for your business before they approve your application for a heavy equipment loan. You should therefore ensure that every single aspect of your business plan is explained correctly and explicitly, enough to give the lender a good synopsis of what your business is all about. Everything from your executive summary, to the description of your product or services, your current cash flow system, your target market, including the socio and economic demographics of your primary market must be well documented.

Heavy Equipment FinancingGet A Quote Or Pro-Forma Invoice For The Equipment

In order to obtain heavy equipment financing, you are going to need to get a quote from the company you are wishing to purchase the material from. This will be requested by the lender when you go to apply for the loan. This makes the process flexible. A business owner knows what is best for his company and select any type or style of equipment to be financed. This includes add on and attachments. For example, a farmer may want a tractor with a harvester attachment and a baler. Simply include that in the invoice to be financed along with the tractor.

Keep Your Cash Flow Statements In Check

Finally, you must ensure that your cash flow statement is in order. Your ability to explain to a prospective lender how your money is coming in and going out in current terms is very important in determining whether your loan application will be approved or denied. This does not only apply to your business finances but to your personal financial statements as well. Every reporting in your cash flow statement must be accurate and ethical, as this is one of the main things lenders look out for when reviewing your financials. Some lenders only review business banks statements and will be looking for no negative day balances.


To Find Out More About Equipment Financing Click Here