A construction equipment loan is helpful for purchasing equipment and supplies for your business. This allows you to have better cash flow and free up funds for other business expenses. These loans can be easier to acquire than a general business loan because they require less paperwork. The equipment acts as collateral for the loan, so this can lead to a lower APR and can make lenders more willing to lend to your business. Besides loans, another option you may choose is a lease.
If you have the money necessary to purchase heavy equipment, it may still be worthwhile to secure a loan because your funds can be dedicated to a different purpose. For example, you could hire more employees or purchase more supplies.
Know Whether a Lease Is Better
A lease does not require that your business make a down payment. As a result, you can free up cash for other business purposes. In some cases, a down payment is required, but the size of the down payment is not as large as what is required for a loan. You have the flexibility to return the equipment afterward or keep it. However, if you intend to keep the equipment, you're better off with a loan.
Choose New or Used
Construction equipment loans allow you to choose whether you'd like to finance new or used equipment. In some cases, you may not be able to finance equipment that is not worth a lot, but you'll be able to finance equipment in many cases. A lot of heavy equipment actually lasts longer than a car would, for example.
Equipment loans can save your business money in other ways. For example, you may be able to receive tax credits for each equipment loan. You'll also receive the benefit of having the equipment sooner, which will allow you to put it to use.
Obtain the Right Loan
Heavy equipment financing should not be confused with equipment financing. While equipment financing is used to finance equipment such as filing cabinets, heavy equipment financing is used to finance equipment used to move pieces of earth and perform other heavy tasks. Loans are often necessary because these forms of equipment are very expensive.
Determine If You Qualify
You'll be able to qualify for a construction equipment loan if your credit is great. However, even if your credit isn't that great, you may still qualify if you have a good business cash flow. You'll also improve your credit through an equipment loan.
Reach out to a company such as Coastal Kapital, LLC. to learn more.