Construction projects, even small ones, require equipment- which can be a challenge for a small construction company without large cash reserves. How can a small company finance equipment that costs tens of thousands of dollars?
There are lots of options, so there’s not a simple answer. Many times, owners of small businesses in the construction industry use a combination of equipment loans/leases. Others may purchase some and lease others based on their needs. The key to figuring out your best option is to evaluate your timeline, financial health, and business goals. In this article, we’ll explain how to secure construction equipment financing for your business.
Steps to Acquire Construction Equipment Financing
The good news is the eligibility criteria for equipment leasing are not as strict as with traditional loans. Since it’s a lease, the company that is leasing the equipment to you still owns it. They are taking on less risk than a business loan lender would be. However, though the criteria are not as strict, the process will look very similar to that of a loan. Additionally, your approval or denial will be based on your credit score, revenue, and how long you have been in business.
Source 1 or more companies offering construction equipment loans/leases
Gather/consolidate paperwork including credit reports, tax returns, balance sheets, bank statements, and income statements
Apply with complete, accurate info- errors will cause the process to be delayed/derailed
Wait for the financing company to respond
If approved, review the loan/lease offer and sign to start the closing process
Is Construction Equipment Financing Right for You?
The economics of paying cash, leasing, or taking out a loan depend on a variety of factors, including your business model, cost of equipment in your location, project length, the type of equipment you need, market demand, and more. Therefore, you want to avoid discussing this with anyone that doesn’t understand your business. Make sure that you compare the total cost of ownership and leasing to determine your best option. You will also want to consider how you plan to pay for the equipment and how it will affect your cash flow. Contact Commercial One Group to learn more about equipment financing and how it can help with your business.