Maybe you’ve just won a bid for a job that requires you to have an additional truck for your crew.
Or perhaps your business is expanding organically and you simply need more equipment to sustain the growth.
Applying for construction equipment funding can be a painstaking and oftentimes nerve-wracking experience for contractors, especially if funding is needed yesterday.
…with the banks can be the cause of lost projects or stunted growth.
If you’re trying to secure construction equipment funding for your business, there are some important factors you need to consider.
In this article, we’ve compiled everything you need to know about construction equipment financing and freeing up your cash flow so that you can focus on the job — and not your bills.
What is Flexbase and how can we help with construction equipment funding?
Flexbase is the one-stop-shop for all of your payment automation needs. From contract to payment applications —and everything in between.
With Flexbase, contractors can:
In addition to automating the payment processes and freeing up valuable time, Flexbase works with top lenders to secure construction equipment financing for construction companies of any size.
Flexbase can provide high-quality data to lenders from the get-go because we can:
As a Flexbase customer, not only will you save yourself the hassle of dealing with creditors and banks, you will know instantly whether your company is prequalified for a construction equipment loan.
Instead of waiting weeks for approval from the bank, you can get working capital now.
Let Flexbase free up your cash flow with construction equipment funding in 24 hours.
Depending on your specific needs, applying for and securing construction equipment funding can be a colossal nightmare. Banks take a long time and often require smaller construction companies to make personal guarantees.
The risk is high and can be a costly undertaking for many companies. Here’s what you need to know.
Heavy equipment loans give businesses the ability to borrow money used to purchase heavy machinery.
Paying upfront for heavy equipment is impossible for some construction companies so heavy equipment financing allows businesses to make scheduled payments and frees up valuable cash flow.
Heavy equipment financing includes construction equipment, such as:
When a business needs to purchase or repair the equipment needed to…
…a product, they may require an equipment loan.
Businesses may apply for an equipment loan to either purchase equipment outright or lease it over a dedicated number of months.
Construction equipment loans typically fund job site equipment, such as:
Most construction companies understand that balancing the need for equipment and machinery while maintaining cash flow and reserves can be very tricky.
It’s not uncommon in the construction industry for customers to take 60 to 90 days or more to pay, making it difficult for contractors to float the cost of a project.
And for this reason, construction equipment financing is a popular choice for contractors.
Some benefits to securing construction equipment funding include:
You know what you need to successfully operate your business.
But, knowing what you need is only half the battle — the easy half — and knowing how you’ll pay for that equipment is the not so easy half.
Securing construction equipment funding is not always simple, so we’ve answered the most common questions asked by contractors about financing and how it works.
Equipment loans allow contractors to make periodic payments, including principal and interest, over a fixed term. Upon full payment, the financed equipment is owned and free of any liens.
Rates and terms of an equipment loan will vary and depend on current market conditions and the qualifications of the applicant.
Some loans are structured with liens upon your business assets or may require you to make a personal guarantee.
It’s very important to read the terms of an equipment loan to fully understand the personal risks.
Failure to pay a loan within the agreed-upon terms could result in repossession of your business or personal assets.
Companies that can prove good revenue have an advantage when securing an equipment loan. While credit scores are important, proof of cash flow is equally important.
Most lenders prefer to do business with companies that have been around for a few years. However, companies with low cash reserves or not enough financial history may be able to qualify for an equipment loan with a down payment.
Leasing equipment is an option that usually has less stringent qualification requirements and is a good alternative for newer businesses that don’t have a consistent revenue stream or multiple years of financial statements.
Depending on the applicant’s qualifications and the original loan amount, construction equipment financing ranges from 1 to 25 year terms.
Conventional financial institutions may offer terms up to 84 months, however with an SBA-backed 504 loan, small businesses may qualify for loan terms of 10, 15, or 25 years.
It’s important to note that while SBA/504 loans typically charge a lower interest rate, they usually require a 10% contribution from the borrower.
Not all businesses have access to this kind of cash reserve, especially where heavy equipment loans are needed.
If you’re trying to acquire construction equipment financing with traditional lenders, such as banks, you can expect a considerable amount of paperwork.
In addition to having to provide…
…many institutions can take weeks to process everything, and even then you’ll be facing delays in receiving actual funds.
Flexbase customers are automatically pre-approved by our preferred lenders, making the application process a breeze.
Because Flexbase can…
…our customers never have to worry about the hassle of construction equipment financing applications and long wait times.
Forget waiting weeks — or even months — for funding.
With the Flexbase pre-approval system, you get the benefits of 24-hour construction equipment funding deposited directly into your business account.
Heavy equipment equals a heavy price tag.
So, for that reason, most contractors opt to apply for heavy equipment loans, rather than draining valuable cash reserves.
Lending institutions usually require contractors to…
… in order to qualify for heavy equipment financing.
And even then, a down payment may be required.
When it comes to construction equipment financing, rates vary from applicant to applicant.
It’s not uncommon to see rates for heavy equipment financing as low as 5-6%, or even lower at the dealer, but these rates are rare and usually reserved for buyers with a large down payment and a stellar credit score.
What you pay in interest depends on:
Generally speaking, interest rates can range from 8-30%, depending on the lending institution.
In short, yes.
You don’t need a perfect credit score to acquire construction equipment funding, but your credit score will ultimately determine factors, such as:
While it’s not impossible to get financing with a poor credit score, it may take some time to find a lender willing to work with you.
It’s no secret that major cash flow issues exist within the construction industry.
For small to midsize contractors, this can cause big problems with business expenses such as payroll and materials.
Rather than digging into your reserves and paying upfront, construction equipment funding provides cash flow relief by spreading out the cost of needed materials for your business over time.
Flexbase customers are automatically pre-approved by our lenders because the information that would normally take the banks weeks to sift through and approve, is already at our fingertips.
With a Flexbase subscription, customers can enjoy:
Not only do our customers reap the benefits of quick and easy construction equipment financing, but our integrative software also gets our contractors paid sooner with automated tools such as:
Schedule your free demo to see how Flexbase can get you paid sooner, secure construction equipment financing instantly, and free up your cash flow today.