The Basics of Equipment Financing for Contractors
The construction industry is one of those few areas that always attract oohs and ahhs when the equipment pulls in. The heavy lifting of contractors is aided by massive, big boy toys that can get the job done. A necessity for a job done well and efficiently, contractors can be left in a serious bind if their machines break down or they need a new vehicle to take the next step. As impressive as it is, heavy duty equipment is expensive, and many contractors may need to rely on construction equipment financing for their next big purchase.
Equipment Leasing
There is more than one option available for contractors looking to finance their purchase. If there is a short-term need for equipment, you may want to consider leasing. This allows you to rent the piece for the duration of your project and return it when you are through. Simply make monthly payment for the contracted number of months, by either paying the equipment company directly or a third-party lender managing the lease. There may be an option to buy the equipment from the lender, if you decide you will need it in the future. Leasing becomes a prime option for temporary or special project needs.
Equipment Loan
An economical option for construction equipment financing is through a bank or non-bank lender loan. In this process, the cost of the equipment is assumed buy the lender, with the asset’s value being used as collateral. You make monthly payment to the lender according to the loan agreement. There are different costs associated with the length of the loan as well as interest, so it’s best to get several quotes when looking at a loan. These loans work well for businesses who need capital available to continue their services, while still allowing them have instant access to the equipment needed for their current job or future projects.
Equipment financing has huge benefits for construction companies. The diversity of projects requires a strong arsenal of available tools, but to purchase everything thing needed is expensive and nearly impossible. A financing options grants access to the tools when they are needed, but without seriously strapping your company for cash. Whether you choose to lease equipment or assume a loan, your company is able to continue to meet the responsibilities of your project without delay. By choosing a loan, your company stands to bring a greater profit over time as the increased business will outweigh the cost of the financing.
