How Can I Afford the Heavy Equipment My Business Needs?
Do you need heavy equipment financing for dummies? Looking for the basics? Well, if you are looking to purchase new heavy machinery for your business, yet you don’t have the cash to do so, you may wonder what your options are. In such a situation, you have two primary choices. You can either take out a business loan or lease the equipment you need. Learning about these options will help you make an educated and informed decision on which is ideal for you.
What is Heavy Equipment?
Heavy equipment is the industrial machinery your business needs to complete its projects on time and under budget. This primarily includes heavy trucks, heavy vehicles, construction equipment, heavy machines, heavy machinery, engineering equipment, or heavy hydraulics. These are often used in construction, excavation, demolition, agriculture, and transportation. From forklifts to military vehicles, compactors to cranes, pavers to underground mining equipment, pipelayers to drilling machines, cement mixers to street sweepers, semi-trucks to trailers, the variety of heavy machinery is equal to the types of work they are designed for.
What is Heavy Equipment Leasing?
One of the first questions you may have about heavy equipment financing for dummies is what is heavy equipment leasing? When you lease a piece of business equipment, you are basically renting it for a prolonged period of time. You know exactly what your monthly payment will be and how long you get to keep the equipment. Once the lease is up, you can decide to purchase the equipment for a pre-set price, which takes into account the amount of money you have already spent on the equipment. In many ways, this is similar to a rent-to-own program. If you fail to make your monthly payment, the equipment is picked up by the leasing company and the lease is terminated.
What is a Heavy Equipment Loan?
Another question you may have about heavy equipment financing for dummies is what is a heavy equipment loan? A heavy equipment loan can also be a ‘business loan’. As ‘business loan’, this means that your business is taking out money in order to pay for the heavy equipment. You purchase the equipment with the loan money and then you own the equipment outright. You simply make your loan to the business loan company on a monthly basis until it is paid in full. Business loans can be used to finance large purchases, such as heavy equipment, to expand your business or to purchase more product.
What is Heavy Equipment Financing?
Additionally, many companies that offer traditional loans also offer heavy equipment financing. This type of loan is similar to a car loan. You finance the piece of equipment through the lender and make them payments. They hold the title to the equipment until it is paid in full, at which time the title is transfered to your businesses name. If you fail to make payments, the equipment can be repossessed and sold to cover the lenders out of pocket expenses.
How Does Credit Score Affect Your Heavy Equipment Financing Options?
One of the biggest factors to consider when leasing or taking out a loan to purchase your business equipment is the credit score for your business. In order to take out a business loan, you need to have a credit score of at least 500. If your business has poor credit, has filed for bankruptcy, has been late on payments, has tax liens or has repossession, an equipment lease may be the better option for you.
How Does Monthly Gross Revenue Affect Your Heavy Equipment Financing Options?
Another factor to consider when deciding whether to lease heavy machines or take out a business loan is how much your monthly gross revenue for the business is. In order to take out either a business loan or heavy equipment financing loan, you must be able to show a steady stream of income. The amount of income varies based on the lender, but typically is anywhere from $5,000 to $10,000 per month, depending on the amount you want to finance. If your business is still new, or can’t prove what it’s monthly gross revenue is, you may be unable to take out a loan. In such cases, equipment leasing is the best choice.
Heavy Equipment Financing For Dummies
If your business relies on heavy machines, heavy vehicles, or any kind of industrial construction equipment, and you don’t have the capital to purchase it outright, you have to decide which options are available and which are best for your business. Educating yourself about all the options and their benefits,will help you to select the option that is right for your business.
Need to know more about business loans, equipment leasing, commercial title loans, business cash advance, business line of credit, or invoice factoring? Don’t worry, our friendly financing experts are standing by to answer all your heavy equipment financing questions today. 888-565-6692.
Heavy Equipment Financing for Dummies | First Capital Business Finance