Are you looking for ways to finance your construction equipment? Go over your options to choose one that will benefit your business the most.
Starting your own construction business is no small feat, especially when it comes to financing your construction equipment and machinery. Most of the time, companies don’t have the money to outright purchase the tools they need to succeed. Luckily, there are a few options you can choose from to finance your equipment—check out your choices below.
Bank or SBA Loans
One way to receive a larger sum of money to pay for equipment is to apply for a bank or SBA loan. Bank loans typically require a business to run for at least two years with a minimum revenue of $100,000. Nonprofit organizations give SBA loans to businesses that need a major fixed asset, such as construction machinery. However, every bank or SBA loan will be through a different entity; therefore, stipulations will vary. The lender might be more lenient with requirements, though, because they can use the machines as collateral.
Lease or Rent Equipment
When you don’t qualify for a loan, perhaps because your business is new, you still have other financing options. Leasing or renting equipment could save you more money than a loan since the monthly payments will be significantly less. Additionally, you can negotiate the terms of rental construction equipment, such as interest rates, term length, etc. Some companies also give you the option of purchasing the machines at a discount after you use them for some time.
Find a Financial Partner
Financing your construction equipment can be challenging to do alone, so why not seek the help of a partner who is also a professional in the business? Captive finance companies—retailers that provide financial services to customers—are also excellent options for your business. These finance companies are familiar with the struggles of needing equipment to generate revenue yet not necessarily having the finances to pay for the machines. They will work with you to find the best way to pay for your equipment, including interest rates and payment plans.
You have several options for financing the heavy equipment you need for your construction business. Go over the advantages and disadvantages of each choice to determine which one will benefit your company more. Remember, if you don’t qualify for a loan, consider renting the machines until you establish more of your business.