Industries

Background of the Equipment Financing Industry

The equipment financing industry provides businesses with the means to acquire essential equipment through various financing solutions, such as loans, leases, and lines of credit. This sector supports a wide range of industries, including manufacturing, construction, healthcare, agriculture, transportation, and technology.

1. Early Days:

   • Pre-Industrial Revolution: Equipment financing was informal and often involved direct borrowing from wealthy individuals or local banks.
   • Industrial Revolution: The rise of factories and mass production led to an increased need for heavy machinery, fostering the development of more formalized equipment financing options.

2. 20th Century:

   • Post-War Boom: After World War II, economic growth spurred demand for new equipment. Financial institutions and specialized finance companies began offering more structured equipment financing solutions.
   • Technological Advances: The advent of computers and advanced machinery in the late 20th century necessitated significant capital investments, leading to further growth in the equipment financing market.

3. Modern Era:

   • Globalization: The expansion of global trade and the rise of multinational corporations have driven the need for more sophisticated and flexible equipment financing solutions.
   • Economic Fluctuations: The industry has adapted to economic cycles, providing critical support during downturns by allowing companies to preserve cash flow while acquiring necessary equipment.

Key Players

1. Banks and Financial Institutions:

   • Major banks offer equipment financing as part of their business lending portfolios. They typically provide loans and leases to businesses of all sizes.

2. Independent Financing Companies:

   • Specialized firms focus exclusively on equipment financing, offering tailored solutions and often providing more flexible terms than traditional banks.

3. Captive Finance Companies:

   • These are subsidiaries of equipment manufacturers that offer financing directly to customers purchasing their products. Examples include John Deere Financial and Caterpillar Financial Services.

Types of Equipment Financing

1. Loans:

   • Businesses borrow money to purchase equipment, with the equipment itself often serving as collateral. Loan terms can vary based on the lender and the borrower’s creditworthiness.

2. Leases:

   • Operating Leases: Short-term leases that do not transfer ownership of the equipment. At the end of the lease, the business can return the equipment, renew the lease, or purchase the equipment.
   • Capital Leases: Long-term leases that transfer ownership to the lessee at the end of the term, often with a nominal purchase option.

3. Lines of Credit:

   • Flexible financing options that allow businesses to draw funds as needed to purchase equipment, repayable over a set period.
   • Master Lease agreement is like a LIne of credit in a sense where a business needs equipment and would just add into one master lease agreement without having to transaction or sign new agreement each time a business adds equipment.

Industry Trends

1. Technological Integration:

   • Advances in technology have led to the development of innovative financing solutions, such as online platforms that streamline the application and approval processes.

2. Sustainability:

   • There is a growing emphasis on financing for sustainable and eco-friendly equipment, driven by regulatory pressures and corporate social responsibility initiatives.

3. Customization:

   • Increasing demand for customized financing solutions tailored to specific industries and business needs, offering more flexible terms and payment options.

4. Economic Factors:

   • Interest rates, inflation, and economic growth significantly influence the equipment financing industry, affecting borrowing costs and investment decisions.

Regulatory Environment

1. National and International Regulations:

   • The industry is subject to a range of regulations that vary by country, including consumer protection laws, tax policies, and financial reporting standards.

2. Industry Standards:

   • Organizations like the Equipment Leasing and Finance Association (ELFA) in the United States provide guidelines and best practices to ensure transparency and fairness in equipment financing transactions.

The equipment financing industry plays a crucial role in enabling businesses to acquire the tools and technology needed for growth and competitiveness. Its evolution has been driven by technological advancements, economic shifts, and the increasing complexity of global trade. As the business landscape continues to change, the industry is likely to see further innovation and adaptation to meet the needs of modern enterprises.

Key Industries Using Equipment Financing

1. Construction
   
   • Heavy machinery (excavators, bulldozers, cranes)
   • Vehicles (dump trucks, mixers)
   • Specialized tools (scaffolding, power tools)
2. Manufacturing
   
   • Production line machinery
   • Robotics and automation equipment
   • Industrial ovens and freezers
3. Healthcare
   
   • Medical imaging devices (MRI, CT scanners)
   • Surgical instruments and operating tables
   • Laboratory equipment
4. Transportation and Logistics
   
   • Fleet vehicles (trucks, vans)
   • Aircraft and aviation equipment
   • Rail and shipping containers
5. Agriculture
   
   • Tractors and combines
   • Irrigation systems
   • Livestock feeding equipment
6. IT and Telecommunications
   
   • Servers and data centers
   • Networking hardware
   • Communication towers and satellites

Biggest Heavy Equipment Manufacturers in America.

1. Caterpillar Inc.
   
   • Industry: Construction and Mining
   • Equipment: Excavators, Loaders, Mining trucks
2. Deere & Company (John Deere)
   
   • Industry: Agriculture
   • Equipment: Tractors, Harvesters, Planting Equipment
3. Siemens AG
   
   • Industry: Manufacturing and Healthcare
   • Equipment: Automation Systems, Medical Imaging Devices
4. General Electric (GE)
   
   • Industry: Energy, Healthcare
   • Equipment: Power Generation Equipment, Medical Devices
5. Komatsu Ltd.
   
   • Industry: Construction and Mining
   • Equipment: Bulldozers, Excavators, Dump Trucks
6. CNH Industrial
   
   • Industry: Agriculture and Construction
   • Equipment: Tractors, Excavators, Loaders
7. Volvo Group
   
   • Industry: Transportation
   • Equipment: Trucks, Buses, Construction Equipment
8. Honeywell International Inc.
   
   • Industry: Aerospace, Manufacturing
   • Equipment: Aerospace Systems, Automation Solutions
9. ABB Ltd.
   
   • Industry: Manufacturing and Robotics
   • Equipment: Industrial Robots, Automation Systems
10. Sandvik AB
    
    • Industry: Mining and Construction
    • Equipment: Mining Machines, Rock Drills
11. Kubota Corporation
    
    • Industry: Agriculture
    • Equipment: Tractors, Lawn Mowers, Utility Vehicles
12. AGCO Corporation
    
    • Industry: Agriculture
    • Equipment: Tractors, Combines, Hay Tools
13. Terex Corporation
    
    • Industry: Construction
    • Equipment: Cranes, Aerial Work Platforms, Material Handlers
14. Xerox Corporation
    
    • Industry: Office and IT Equipment
    • Equipment: Printers, Copiers, IT Services
15. Medtronic plc
    
    • Industry: Healthcare
    • Equipment: Medical Devices, Surgical Instruments
16. Daifuku Co., Ltd.
    
    • Industry: Manufacturing and Logistics
    • Equipment: Material Handling Systems, Automated Warehouses
17. Hitachi Construction Machinery
    
    • Industry: Construction
    • Equipment: Excavators, Wheel Loaders, Mining Trucks
18. Hyster-Yale Materials Handling
    
    • Industry: Manufacturing and Logistics
    • Equipment: Forklifts, Material Handling Equipment
19. Boeing Company
    
    • Industry: Aerospace
    • Equipment: Aircraft, Aviation Systems
20. Lockheed Martin Corporation
    
    • Industry: Defense and Aerospace
    • Equipment: Aircraft, Space Systems

Financing Options for Heavy Equipment

1. Loans
   
   • Term Loans: Fixed interest rate with regular payments over a set period.
   • Balloon Loans: Lower monthly payments with a larger final payment.
2. Leases
   
   • Operating Leases: Typically shorter-term, equipment is returned at the end of the lease.
   • Finance Leases: Longer-term, the lessee may purchase the equipment at the end.
3. Hire Purchase
   
   • Ownership is transferred to the buyer after all payments are made.
4. Vendor Financing
   
   • Manufacturers or dealers provide financing directly.

Top Equipment Financing Companies

1. CIT Group
2. Wells Fargo Equipment Finance
3. DLL Group (De Lage Landen)
4. Bank of America Equipment Finance
5. U.S. Bank Equipment Finance
6. Key Equipment Finance
7. PNC Equipment Finance
8. GE Capital
9. TIAA Bank Commercial Finance
10. JP Morgan Chase Equipment Finance
11. Hitachi Capital America
12. Siemens Financial Services
13. BMO Harris Equipment Finance
14. BB&T Equipment Finance
15. HSBC Equipment Finance
16. Fifth Third Bank Equipment Finance
17. Santander Bank Equipment Finance
18. TD Equipment Finance
19. M&T Bank Equipment Finance
20. Regions Equipment Finance

Bank Hopping for Equipment Loans: Why It’s Time-Consuming and How Liberty Capital Can Help.

Searching for the right equipment lender especially if you’ve already been turned down by your bank, by hopping from one bank to another just trying to figure out whether they will approval you can be a time-consuming and frustrating process, especially if you have challenging credit. Each application involves time-consuming paperwork and potential rejections. If you get turned down, how many more lenders will you apply to before seeking better options from a loan broker?

Working with an equipment loan broker like Liberty Capital can streamline the process, saving you both time and money. Brokers have access to multiple lenders that can structure any credit profile specific to you, even if your credit is less than perfect. With their expertise and network, brokers can navigate the complexities of loan applications and increase your chances of approval. You may not know all the intricacies of equipment financing thus a loan broker will be able to help you navigate.

So why go through the hassle of bank hopping when Liberty Capital can do the work for you, ensuring you get the best possible deal?

What do I need to apply?

1.     ONLINE APPLICATION: You can fill out our application, upload and authorized us to process. We do soft-inquiry, and our lender will do hard inquiries once you are approved.

2.     Equipment Invoice or Quote for the truck or equipment you want to buy. Multiple vendors accepted. We’ll lump them into one monthly payment for you.

3.     Banks statements (3-4 months) – Proof income, proof of banking, and proof funds availability in case down payment is needed and to match for ACH Payment Drafting – as an auto pay.