Heavy Equipment Financing 101

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Wednesday, December 2nd, 2015

What to Know Before You Apply for a Heavy Equipment Loan

The scenario is familiar, your construction business needs a backhoe, skid steer, dump truck or any other type of heavy equipment. Having one will cut future building costs by eliminating at least one sub-contractor. Scheduling may also be easier to manage producing a shorter timeline which is also a cost-saving. Construction equipment, even used machinery, however, is not inexpensive.

Few contractors would have the working capital to purchase outright or to lease equipment. A solution is heavy equipment financing enabling business owners to keep some degree of liquidity while (literally) moving their business forward. The following is what you’ll need to know or plan to discuss with your lender.

Know Your Heavy Equipment Financing Requirements

You already know what equipment you need and what it is for. We mean your financial requirements relative to your prospective loan terms. A better understanding of what you want to pay monthly and how, will assist your lender to locate the right funding option for you. Questions to ask yourself include:

  • How long do you plan to use the equipment? If the answer is “as long as possible” then you might want to consider long-term financing to make your payments lower. If the machinery or asset will help your firm fulfill a single building contract, then you may only need the machine for the short term. If this is the case, financing the asset on an operating lease may be best for you. Loan agreements that vary the payment amount versus paying the same amount year round are considerations if you operate a seasonal business. That way, you can pay when your business is generating income and cash flow is greater.
  • Prepare for the application process. If you’re seeking your loan through a traditional lender such as a bank, there may be considerable paperwork and you’ll also provide business records including financial statements. When seeking financing through a well-regarded alternative lender, such as National Business Capital, the process is streamlined. Applicants fill out and submit a brief form usually within two minutes.
  • How fast do you need the money? Banks based their loan decisions on criteria that includes the owner’s financial history. An application may take weeks to review and once approved, funds are not generally available immediately. There may also be regulations governing from whom the equipment may be leased or purchased. The entire process may take months. Historically, banks decline 84% of the loan applications they receive. National Business Capital has an over 90% loan approval rate. This is not expedient for contractors following tight timelines to fulfill contractual obligations. National Business Capital, however, does not require a spotless credit history and uses realistic underwriting practices when making our loan decisions. Submit your application and you’ll have our decision within 24 hours. Once approved, the money will be deposited in your account within days. Best of all, you may purchase or lease your equipment from any vendor you wish. 

National Business Capital establishes long-term financial relationships with every one of our clients. We earn your trust by delivering on our promise to treat you and your business as if it is our own. Your success is our success. Start a conversation with us today and learn how we will strive to find the right funding your business requires to thrive: (888) 888-9124.

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