Get Competitive Terms for Construction Equipment Financing
Financing & Leasing Solutions For Construction Equipment.
Feature | Equipment Loan | Equipment Leasing | Equipment Financing |
Ownership | Yes, after loan repayment | No, unless purchase option is used | Varies |
Initial Costs | Moderate to high | Low to moderate | Varies |
Monthly Payments | Fixed | Fixed | Variable |
Tax Benefits | Interest & depreciation deductions | Lease payment deductions | Depends on tax structure |
Risk of Obsolescence | High | Low | Varies |
Maintenance Responsibility | Yes | Sometimes included | Varies |
Long-term Costs | Potentially lower | Potentially higher | Varies |
Flexibility | Moderate | High | High
|
Which is better, Equipment Leasing or Equipment Financing?
Equipment financing is one of many avenues a business owner can entertain when acquiring business essential equipment. A type of loan also known as “equipment lease” that enables businesses to acquire equipment without paying the full equipment cost upfront. This type of financing is crucial for industries that rely on heavy duty equipment and machinery, commercial equipment, medical equipment, commercial trucks and trailers, or technology hardware are just the few types of equipment that are typically financed when purchase.
Definition:
Equipment financing is a form of financing for any industry, where you acquire business essential equipment for a specific term rather than purchasing it outright using borrowed or your own working capital. At the end of the term, you may have the option to buy the equipment, renew the lease, or return the equipment if there’s a buyout. Here are the top three forms of equipment financing.
For construction companies, heavy equipment is essential, these types of equipment loans can help your construction company grow.
FMV Lease – Fair Market Value – (True Lease): Payments are deductible as business expenses. No Section 179 deduction available because the lessee does not own the construction equipment.
Alternatively, there is 10% FMV LEASE where regardless of the market value, your buyout is predetermined at signing rather than letting the Market Value dictate your buyout.
Dollar Buyout Lease: Treated more like a purchase for tax purposes. Lessee can claim Section 179 deduction.
Equipment Financing Agreement: Treated as a loan. Lessee can claim Section 179 deduction.
Leasing vs. Buying
Ø Equipment Leasing: Lower initial costs, ability to upgrade to newer technology, and tax benefits. Leasing companies may offer flexible terms like deferred payments. Your business can grow through financing without giving up equity or profit.
Ø Buying: Higher initial costs, lost opportunity to use cash for other profitable investment. Fixed asset shouldn’t be paid cash especially depreciating assets. Ownership of the asset yes but can’t monetize it for potential cashflow. You can collateralize it for other loans for better long-term cashflow funding.
Loans and Financing Options
Ø Bank Loans: Traditional financing through banks has the most competitive interest rates and terms; however, only for well-qualified borrowers who are well organized who can jump through hoops to get it. Going to the bank is guaranteed you’re going to an A Credit Lender. So, are you an A Credit borrower? Do you have your audited financial statements? Do you have personal financial statements prepped? How can you tell whether you’re bank approvable or not. Having good credit isn’t the only criteria they look at. Remember the “5 C’s” in credit underwriting requirements?
Ø Equipment Financing Companies: Specialize in commercial equipment. Equipment leasing and equipment loans my differ, offering tailored financing solutions like equipment finance agreement where it’s financing rather than leasing. There is no balloon or buyout at the end of the term.
Ø Vendor Financing: Many Trailer manufacturers offer in-house financing options to make purchasing their equipment more accessible. Vendor financing doesn’t always cover those with low or marginal credit. Our Equipment Vendor Financing programs cater to all types of credit. Our credit requirements are wider than most the benefit of working with a reliable and trusted equipment loan broker.
Covers many types of construction equipment we can finance.
Bank Hopping for Equipment Finance: 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?
Special Financing programs
Ø $0 Down for qualified lessee
Ø 1 Advance Payment
Ø 90-day deferred payment
Ø $1 buyout, no prepayment penalty
Ø Monthly payment up to 5 years
Ø Equipment finance Agreement
Ø Low Admin and doc fee
Ø $99 for first 6 months
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?
The Construction Equipment Financing Application Only up to $250,000
Construction companies often face significant upfront costs for acquiring essential equipment. Financing can help. However, managing these expenses, preserve cash flow, and enable businesses to stay competitive is another challenge. That’s why it’s important to work with someone you can trust. Liberty Capital Group, Inc. has been serving the construction industry for 20 years. We know construction equipment financing inside out. We cater to all types of credit including startups.
Types of Construction Equipment you can finance.
- Heavy Equipment: Excavators, bulldozers, cranes, loaders, backhoes, graders,
- Earthmoving Equipment: Trenchers, logging equipment, drilling equipment
- Material Handling Equipment: Forklifts, telehandlers.
- Concrete Equipment: Mixers, pumps, pump trailer, pump trucks
- Road Construction Equipment: Pavers, compactors, asphalt milling machines.
- Commercial Trucks – tractor trucks, commercial trucks
- Commercial Trailers – dry van trailers, enclosed trailer, refrigerated trailers
- Plumbing Equipment – Pipe Camera, service trucks and heavy equipment
- Roofing Equipment – lift, boom lift, forklift, crane trucks
- Landscaping Equipment – commercial lawn mowers, tree trimmers, mulcher,
Financing and leasing construction equipment is a strategic decision that can impact a company’s financial health and operational efficiency. Understanding the available options and their benefits can help construction companies make informed choices that support growth and sustainability.
For more personalized advice and detailed information on financing options, construction companies should consult with financial experts or reach out to providers like Liberty Capital Group.
Easier to get than a traditional business loan
Less paperwork
Fast processing time
Less stringent requirements for qualifying
No collateral needed, the equipment is the collateral
May require less credit score for you and your business as well
What do I need to apply?
1. ONLINE APPLICATION: You can fill out our application, upload and authorized us to process your application. We do soft-inquiry, and our lender will do hard inquiries once you are approved for Equipment Financing only.
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. We’ll accept bill-of-sale for some private sale.
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.
Before signing equipment lease agreement carefully review the critical make up of the transaction. THere should be payment, terms, end of option and upfront cash needed at signing. Make sure you’re not signing an FMV Lease when the salesperson says dollar buyout but the contract is actual FMV or Fair Market Value. Key components to check include:
- Payment Terms: Understand the monthly payment amount and due dates.
- Interim Rent: Is there an interim rent, which is rent in between the time of the next billing from the date of acceptance or lease commencement.
- Maintenance and Repairs: Determine who is responsible for maintenance and repairs. Most equipment financing don’t apply unless warranty is added into the agreement and financing. If through the vendor, it will be through manufacturer warranty and services but not lender’s responsibility.
- End-of-Lease Options: Know your options at the end of the lease, such as purchasing the equipment for a dollar or $101 for some state like FL, renewing the lease it has a balloon, or returning the equipment.
- Early Termination: Be aware of any penalties for early termination of the lease. You may not pay any penalty for paying it early, but you’re still liable for the full term regardless of when you pay it off.
- Advance Payment: First and Last, security deposit or down payment might be required. Check your equipment lease agreement to make sure you are aware of any money upfront to consummate the lease financing agreement.
- Down Payment: Down payment reduces the amount financed.
- Security Deposit: Security deposit is typically refundable unlike down payment.
Budgeting for Financing
- Initial Costs: Some leases require a down payment, security deposit or initial fees like admin fees, first and last. Factor these into your budget.
- Monthly Payments: Ensure your cash flow can comfortably cover the monthly lease payments. Does the equipment make money. Does it work all year round?
- Additional Costs: Insurance, delivery, sales tax and other additional warranty or services that might be included in the equipment financing purchase. Operating capital to manage the equipment and the machinery.
Additional financing benefits you can qualify for to conserver working capital.
- *$99 for the First 6 Months:Get started with minimal upfront costs for well qualified lessee.
- 90-Day Deferred Payments:Pay nothing for the first three months.
- **if you get disqualified for equipment financing you might have an option for a Working Capital Loans:
Tips for Successful Equipment Financing Experience
Access short-term cash flow solutions for immediate cash need where your funds wired to your business bank account and you use it to purchase the equipment, leaving you a free and clear equipment. Working capital loans doesn’t specifically add the equipment into the UCC-1 Filing. Additionally, it doesn’t appear onto you personal credit. But it’s not really meant for heavy equipment purchase unless it’s going to generate revenue in a short period of time or you have bad credit that it’s the last resort, which is understandable.
- Plan Ahead: Start the financing process early to ensure all equipment is ready for your opening day. Provide credit and funding stipulations upfront. Don’t alter any documents. Get pre-approved Know you have the option to get financing.
- Contact your equipment dealer: Get an invoice/quote for the lender to review and approved. Apply with your bank so you know whether they’re an option or not for a peace of mind. Alternatively, if you know you won’t qualify at your bank, contact Liberty Capital Group, Inc.
- Vendor Approval: Each transaction a vendor must be approved. They want to make sure vendor is reputable who will deliver what you lease or purchase.
- Equipment Approval: Every financing transaction, equipment must be approved. They need to make sure a restaurant is not buying a restaurant equipment. A restaurant can’t buy a backhoe. It doesn’t make sense.
- Equipment must be business essential.
- Negotiate: Don’t just negotiate with the vendor, you can also negotiate with the lender. Don’t be afraid to negotiate lease terms to get the best deal possible.
- Consult Professionals Equipment Loan Broker: Work with a financial advisor or accountant to understand the financial implications of financing. They’re the best source for information on how you can maximize your financing options.
Construction Equipment Financing can be a strategic move for any construction owners. It providing flexibility and preserving working capital is a good cashflow management strategy especially for a volatile industry.
By understanding the equipment financing process and carefully selecting your equipment and financing partner, you can set your business up for success faster, rather than waiting for cash to come by. Don’t let opportunity hold you back due to lack of capital. You have funding options with Liberty Capital. Contact us today. We’re ready to help your business grow and elevate to the next level. Best of luck! Liberty is your Freedom!
Credit Requirements for Startup Construction Companies
For startup companies, we require: Credit requirements Varies. Here’s how you get your ducks in a row to make sure you make it easy for the lender approve you.
- Business license or active business entity registration.
- Personal guarantees from all owners – history matters.
- Minimum 650+ credit score.
- No bankruptcies in the last 7 years.
- No unresolved tax liens.
- No judgments, or repossessions
- Sufficient networth
Are you an Equipment Vendor??
If you sell new or used trucks, trailers or machinery including medical equipment, we’d love to partner with you to offer highest approval rate for your clients. Our goal is to get them approved no matter what their credit profile might be. Working with Liberty Capital will give you a wider credit window so you can stop shopping for your clients. We do soft-inquiry for each applicant.
- Check out how you can grow your vendor business using our financing options. View our credit guidelines here.
- Download our equipment vendor package here.Get Started Today!
If you’re seeking a reliable funding partner for your new or used construction equipment financing needs, apply online today or call our Funding Specialists at 888-588-4128 for personalized assistance. Let Liberty Capital Group, Inc. empower your business with comprehensive financing solutions tailored to your clients requirements.
Our small business financing experts are available to guide you through the funding Process.
Despite technological advancements, loans, especially in construction equipment financing, predominantly involve personal interaction with an underwriter to ensure as fraud prevention. Automation may not suffice, particularly when dealing with a third party like the vendor and the complexities of equipment purchase. In such scenarios, business owners are often better served by collaborating with a Business Loans Broker like Liberty Capital Group, Inc., who can steer them in the right direction.
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