Heavy Equipment Financing Uses
You can use heavy equipment financing to buy any pre-owned or new equipment needed for business operations. You’ll typically receive around 80% to 100% of the heavy machinery’s full value. The equipment serves as loan collateral; you own it free and clear once you’ve paid off your debt.
Business owners commonly use heavy equipment financing to purchase construction equipment like:
- Heavy vehicles
- Dump trucks
- Feller bunchers
- Wheel tractor scrapers
- Skid steers
- Cement mixers
How Does Heavy Equipment Financing Work?
With heavy equipment financing, you receive a loan that covers around 80% to 100% of the equipment’s cost. You won’t have to provide a large down payment or collateral because the equipment you’re buying serves as financing collateral.
You make monthly payments toward your construction equipment financing until it’s paid back. Each financing program has its own repayment terms, which may vary by lender, loan amount, and type of equipment you’re buying.
You typically finance a piece of equipment for its expected life span, which is somewhere between two and seven years. Some lenders may cut this off at five years (especially for used or less expensive equipment), while others may give you 10 years to repay the loan.
Most businesses use this type of business financing to invest in machinery they need long term. Once the loan is fully paid, you have complete ownership of the heavy machinery. This means you can keep using it for as long as it is operational.
What Are the Eligibility Requirements for Heavy Equipment Financing?
When you apply for heavy equipment financing, lenders consider:
Average monthly income. The best way to qualify for a loan is to show you can repay it. Lenders typically approve loan applications quicker when you generate at least $10,000 per month in revenue.
Time in business. Lenders prefer you be in business for at least six months.
Equipment value. Your repayment terms and the loan amount will also depend on the value of the heavy equipment you plan to buy.
Credit rating. At Clarify Capital, we recommend that your credit score is at least 550 to facilitate quick loan approval.
If your credit is less than stellar, contact us directly and speak to a Clarify adviser so we can help you look at other options. Since the equipment serves as collateral, credit scores aren’t as big a factor for equipment financing as they are with other types of loans.
What to Look For in a Heavy Equipment Financing Company
Part of running and growing your company is ensuring you have enough cash flow for all of your business expenses. This includes getting competitive rates and terms if you’re financing heavy equipment.
Here’s what to look for in a heavy equipment financing company.
Since equipment loans are generally considered lower risk, you can finance used and new heavy machinery for low rates. At Clarify Capital, we work with over 75 lenders, so you can compare term loans to find the best rate. We offer heavy equipment loans starting at just 7% APR.
Ability to Finance the Equipment’s Full Value
Even though your bank may offer equipment loans for small businesses, they may only provide up to 80% of the total cost (which you’ll have to cover with your own cash). With Clarify, you have access to alternative lenders (e.g., online banks) that may provide financing for the heavy machinery’s full cost.
No Hidden Fee
Pay close attention to down payment requirements, origination fees, and other hidden fees. Ensure your interest rate and repayment period are also specified.
At Clarify, we don’t include prepayment penalties or vague terms because we believe in transparency. That’s why you have a dedicated Clarify adviser who walks you through the application process.
They’ll help you choose the best loan option for your business needs and ensure you know what you’re getting into before agreeing to any loan.
Discover How Clarify Capital Helps You Get the Equipment You Need
As a business owner, you have to make careful decisions regarding managing your business’s cash flow. You have to be strategic in approaching large purchases to afford to buy the equipment you need and still fund day-to-day operations. You know that if you use up all available cash in a single asset, you may be unable to cover other expenses or handle emergencies.
This is why equipment financing is one of the best ways to fund the equipment your business needs to operate. You can also use it when upgrading or replacing large machinery.
At Clarify Capital, we’ve streamlined our processes to make purchasing new and used equipment as easy as possible. We’re passionate about providing quick approval on heavy equipment financing for qualified business owners. Complete an online application today and get your funding in as little as 24 hours.
FAQ About Heavy Equipment Loans
Heavy equipment financing describes a loan or lease used to obtain different types of heavy machinery. Heavy equipment is commonly associated with construction work because construction jobs typically require heavy machinery.
The loan or lease is used to access and utilize heavy machinery needed to conduct business. Dump trucks and bulldozers, for example, are expensive and heavy equipment that many choose to finance. By securing financing for heavy machinery, business owners can perform necessary company operations and help their businesses grow.
There are different financing options available. Each option has unique advantages and disadvantages. Talk to a lender at Clarify to determine which financing option is right for you.
Heavy equipment financing describes a more specific category of equipment than equipment financing. Heavy equipment financing is funding for heavy machinery, in particular. Heavy machinery is commonly used for construction and building maintenance, for example.
Equipment financing is funding for all types of business equipment. This might include computers for an office building or a commercial oven for a restaurant. It describes a broader range of equipment than heavy equipment financing.