Heavy equipment financing refers to loans for business owners who need to buy large pieces of machinery. This financing option is popular in the farming, landscaping, and construction industries because the equipment needed comes at a steep price.
Heavy equipment can be quite costly (especially for small or new businesses), but it's also necessary for day-to-day operations. Many times, having the right equipment is crucial to compete in the industry and can mean getting big projects that pay well.
Fortunately, you can get the large machinery you need through funding from equipment financing lenders as opposed to heavy equipment leasing. These business loans provide the capital your business needs to buy machinery upfront.
Financing allows businesses to secure the equipment they need now while spreading costs over time, protecting cash flow for payroll, fuel, maintenance, and materials.
If you're interested in buying equipment for your business, this guide will help you understand if a heavy equipment loan is the right financing solution for you, and show you how to get the funding you need quickly.
Benefits of Heavy Equipment Financing
Most growing businesses need to upgrade and replace heavy equipment at some point or another. Here's how a heavy equipment financing loan can help:
Competitive APR. Compared to term loans, equipment loans are generally considered lower risk. Because of this, you can finance used and new heavy machinery at low rates, starting at just 7% APR.
Financing available up to 100%. Most banks only provide up to 80% of heavy equipment value, leaving small businesses to cover the difference with their own cash reserves. At Clarify, we provide financing for up to 100% of heavy machinery costs.
No hidden fees. Transparency is a fundamental company belief. We never include prepayment penalties or sneaky loan terms. What you see is what you get.
Get approved with any credit score. We understand that not everyone has perfect credit. Unlike SBA loans or lines of credit that may have strict credit requirements, credit scores of 550 and above can be approved for equipment financing.
Minimal paperwork for approval. We strive to make documentation quick and easy. Unlike traditional banking institutions that tend to be paperwork-heavy on credit approval and annual revenue, Clarify only requires your last three months of bank statements.
No collateral needed. With heavy equipment financing, you don't have to worry about a personal guarantee or collateral. The equipment you're buying or leasing can be used as security for the loan.
Long repayment terms for expensive equipment. Clarify Capital's heavy equipment financing typically offers longer loan terms than standard business loans, allowing you to spread payments over the expected life of the machinery and keep monthly costs manageable.
Option to buy or lease equipment. Depending on your business needs, Clarify Capital supports both long-term equipment financing and leasing options through its lending network, giving you the flexibility to preserve cash flow, manage monthly costs, and adapt as your equipment needs change.
At Clarify Capital, we've streamlined our processes to make purchasing new and used equipment as easy as possible for borrowers. We're passionate about providing quick approval on heavy equipment financing for qualified business owners.
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:
Earthmoving and construction equipment. Excavators, bulldozers, backhoes, loaders, skid steers, trenchers, and wheel tractor scrapers.
Lifting and material-handling equipment. Cranes, forklifts, and heavy-duty hoisting machinery used on commercial and industrial job sites.
Paving and roadwork machinery. Pavers, rollers, and cement mixers used for infrastructure and asphalt projects.
Forestry and land-clearing equipment. Feller bunchers and other specialized machinery for logging and site preparation.
Heavy vehicles and commercial trucks. Dump trucks, semi-trucks, and other heavy-duty vehicles used in construction, hauling, and transportation.
Agricultural and farm machinery. Tractors, combines, harvesters, balers, sprayers, seed drills, plows, tillers, irrigation equipment, and other large machinery used for planting, harvesting, and land maintenance.
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 the 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 more quickly 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:
Competitive APRs. 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 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.
