Heavy equipment is an essential part of any landscaping or construction business. If your daily operations involve drilling, digging, moving, or lifting heavy things, it will be nearly impossible to avoid using heavy equipment daily.
However, this kind of equipment can cost anywhere from tens of thousands to millions of dollars, especially when it is new, and depending on the scale of your work and how many machines you require, costs can add up quite fast.
If your business is just starting or you have a smaller company, you may not have enough cash flow to spend on expensive heavy equipment. It will also be crucial for your business to save some reserve money in emergencies. However, that doesn’t mean your need for such equipment will disappear.
Fortunately, there are heavy equipment financing options that you can take advantage of, which will help relieve some of that financial stress from you and your business while ensuring that you still have access to all the heavy equipment you need.
With heavy equipment financing, you can get a loan from a lender and use that money to secure the heavy equipment you need. Then, the equipment acquisition cost is spread out, and you can pay that loan off over months or years while continuing to use the equipment for the entire time.
This payment option can allow smaller businesses or those with less cash flow to balance their need for essential heavy equipment with the importance of maintaining cash reserves and working capital.
Paying back the loan will come with a predictable, consistent repayment schedule, making it easier for you and your business to budget and plan. Heavy equipment repayment plans are also often variable so you can select a shorter or longer repayment term based on your business’s financial needs and abilities.
Having such flexibility will relieve some of the pressure and stress of having to pay more than you can afford and gives you the option to have more balance when it comes to your repayment.
Another common option for acquiring expensive heavy equipment that is difficult for your business to afford is leasing. However, it is important to understand that there are a few major differences between heavy equipment financing and heavy equipment leasing, as this will allow you to make a more informed decision about which option makes more sense for you and your business from a practical and financial standpoint.
Essentially, a heavy equipment lease allows you to borrow the equipment you need and pay to use it over time. When you lease heavy equipment, a down payment is not necessary. Instead, you simply set up a fixed period that you agree to rent the equipment and a fixed rental cost, and you pay for your use of that equipment every month.
However, unlike heavy equipment financing, it is not guaranteed that you will own the equipment in the end. Typically, when financing equipment, you progressively buy it outright, and by the end of your loan term, it belongs to you.
On the other hand, as you progress through a leasing contract, the equipment you are paying for does not belong to you, nor are you getting any closer to owning it.
You have a few options at the end of a heavy equipment lease. You can either return the equipment, renew your lease and continue renting it, or buy it at its current market value. Of course, you also have the option to switch to a new leasing contract with more unique, better equipment if the equipment you had been leasing has become obsolete.
Like any other type of loan, it is also necessary to qualify for a heavy equipment loan, another important aspect to consider when deciding how to acquire the required equipment. Fortunately, the standard requirements for qualifying for a heavy equipment loan are relatively low in comparison to other loan and financing options. That is because the equipment you are financing is collateral for the loan.
Of course, there is some variation between lender to lender, but in most cases, if your business has been in operation for at least a year and has a decent credit score or cash flow, you should be able to qualify for a heavy equipment loan.
When it comes to the interest rate on your loan, it will be decided by your lender based on your company’s age, history, and credit score. Generally, as your company gets older and your credit score increases, you can gain access to even better interest rates.
Fortunately, even if your company is quite young and its credit score is relatively mediocre or poor, you can probably still qualify for a heavy equipment loan. However, in such a scenario, your lender may require you to make a down payment on the equipment. Or, if your business is doing well relative to the value of the equipment you are leasing, you may be able to use that as leverage despite your credit score.
If you are seeking heavy equipment financing in British Columbia, Great West Equipment can certainly help you out. Working with a lender that understands the unique challenges of every industry can make a huge difference, and that is exactly what we can offer. Great West Equipment would be happy to help you acquire the heavy equipment you need to keep your operation going.
At Great West Equipment, we have specialized programs with our OEM partner, like our Smart Commercial Accounts, which simplify heavy equipment financing. We can also provide solutions for Major Equipment rebuild and Refurbishment programs. That way, you can use your equity to make convenient payment plans. We also offer the option to set up an in-house Parts and Service account.
We also offer new and used equipment operating and capital leasing programs if you decide that is the route that makes more sense for your business. Both our loan and leasing programs are fully protected.
We are dedicated to making your acquisition of heavy equipment as easy as can be, which is why someone from our team would be glad to walk you through a no-obligation planning session.
For more information about how you can partner with us to set up a heavy equipment financing or leasing arrangement or to request a consult, call Great West Equipment at 1-833-730-0613 or contact us here.