Heavy Equipment Financing

Purchasing new or even used equipment is a large investment that a business cannot always pay out of pocket. When capital is needed, getting a construction equipment loan is a reasonable choice. The loan application process can be difficult because there are many factors to consider. Working with an experienced lender can make it simpler.

Process

The first step is to contact the right lender. That may or may not be the financial institution with which you normally do business. It is worth seeking out a lender that specializes in heavy equipment financing. Their industry knowledge can save you some headaches and provide additional factors to consider or avenues to pursue.

Regardless of what lender you use, there is some information that you can expect to report on the application. These items are not that much different than the data you provide when seeking a personal loan. Items include:

• Company name
• Address
• Contact information for business owner or officer
• Annual gross income
• Monthly credit card volume

Once the financial specialist has that information, they will start looking into your company’s credit worthiness, what you can afford, and their ability to help you. Most construction equipment financing experts can customize plans to fit your business needs.

The following conditions have tremendous impact on the lease terms and approval. You want to be sure to have these facts and figures on hand and if needed, look ahead to take the steps necessary to ensure you qualify for approval.

Credit standing and credit issues

A good business credit score provides reasonable assurance to the lender that you will be able to make payments on financing. A low credit score can mean higher interest rates, shorter terms, or denial of your loan application. If your credit score is at a low point, take steps to improve it before applying.

Length of time your business has been in operation
The longer your company has been in business, the more confident your lender will be that you know how to make good decisions, run your business and stay in business for the foreseeable future. Longevity is an important indicator of reliability.

Number of pieces of equipment desired

The more you want, the more you have to pay for. This may mean larger payments or extended time to pay back the financing. If you ask for too much, you may be denied.

The best thing to do is conduct your research, prioritize your needs and find economical ways to get everything you want. Instead of two pieces of equipment, maybe one piece of equipment with an attachment would be a better choice. An experienced construction equipment financing lender may be able to offer alternatives, such as different equipment choices or leasing instead of buying.

Type of equipment

One thing a lender will consider is what type of equipment you want and why. If you are a landscaping business, a heavy duty pavement roller may seem an unusual requirement. Make sure you are choosing equipment that is absolutely necessary to the success of your current business and future growth. If it is for a new venture, or new branch to your business, be prepared to justify the expense and show its viability to your operation.

Total revenue of the business over the past 12 months

This figure is the same as personal gross annual income if you were applying for a personal loan. It gives the bank or financial institution a figure to use to see what payments you can afford. If you are a start-up, it shows your growth track and earning potential. Be prepared to also submit a business plan or short term and long term forecasting to help their decision.

Construction equipment leasing is another viable option to increase your efficiency and expand your business. Depending on how much you need and what equipment you want, it may allow you to maximize your available funds. Many of the same considerations and factors that are used to determine purchasing approval are used to determine leasing approval.