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Heavy Equipment Financing
You can’t perform a task without the tools your business needs. Sometimes making a business successful requires big upfront purchases, like heavy equipment. With the average cost of equipment such as excavators ranging from $100,000-$500,000, it may not always be possible to buy new equipment outright. Your purchase may require financing from Customers Bank.
Excavators aren’t the only piece of heavy equipment that can stretch your budget. Whether you’re a brand-new contractor or launching a new landscaping company, heavy equipment is needed for:
- Construction: Boom lift, bulldozer, wheel tractor-scraper, skid steer loader, and backhoe are examples of heavy equipment needed in the construction industry.
- Agriculture: Farming requires an arsenal of heavy equipment like tractors, combines, plows, fertilizer spreaders, balers, and seeders.
- Warehousing: The warehouse environment needs equipment like forklifts, pallet jacks, hand trucks, hoists, and monorails to help pick up items and move them around the storage facility.
- Landscaping: A landscaping business needs compact track loaders, multi-terrain loaders, skid steer loaders, and backhoes for major projects.
Keeping your company moving forward while purchasing all of this equipment may seem overwhelming. Fortunately, there are several ways to finance the purchase of the equipment needed to keep you in business. From aviation to plastics, the Customers Bank team specializes in specific industries to better address your equipment needs.
Heavy Equipment Financing
Even if your business is doing well, the chances that you have an extra $500,000 to purchase a brand-new excavator are probably slim. But, if you do, one option for acquiring new equipment is to buy it outright.
Another way to acquire the heavy equipment you need is to lease it. A lease is like a rental agreement. You sign a contract to borrow the equipment for a fixed price each month. At the end of the lease, the equipment does not belong to you. You can decide to buy it outright, renew the lease, or return the heavy machinery.
If you want the equipment as an investment in assets and tax breaks, you can purchase your needed equipment with a loan. Like a lease, you make a monthly payment for a fixed amount of time, and your equipment will belong to you at the end of the term.
What You Need to Know
Suppose you’ve decided to finance your heavy equipment. In that case, there are a few aspects to consider before applying for a lease or loan. First, you’ll need to consider the equipment’s cost versus the revenue your business currently generates.
You should also have the documentation in order. The lender will need to know some general details about your creditworthiness. The specifics will vary depending on the financial institution but may include business and personal tax information, business plans, and bank statements.
Another aspect to consider when financing heavy equipment is the loan details. Generally speaking, interest rates are primarily affected by credit scores. The higher your credit score, the lower the interest rate will typically be. If you have good credit, shop around for a loan to compare your options, as interest rates vary widely from 8-30 percent on heavy equipment.
When considering the terms of the loan, bear in mind that it will depend on the life expectancy of the equipment. The life expectancy of the equipment comes into question when buying older machinery.
When You’re Ready to Finance
Once you’ve determined the type of heavy equipment needed to establish or advance your business, it’s time to make purchasing decisions. Whether you decide to lease or apply for a loan, make sure to shop around for affordable financing. Customers Bank will give you a personalized loan analysis on a tailored, competitive financial solution for your growing company.