10 Tips for Using Equipment Financing for Construction Equipment
In the construction industry, having access to machinery is vital for profits, growth and stability. Here are 10 ways to put equipment financing to work for you:
1. Minimize Your Financial Risk
If you choose to purchase equipment with cash or your business savings, you assume all the risk related to the machinery. An equipment lease transfers the majority of this financial risk to the financing company.
2. Make Smart Use of Equipment Upgrades
As equipment wears after years of use, it can lose part of its value or effectiveness, which may cost you profits. Equipment leases allow you to get the best years of service and then upgrade to new equipment when required.
3. Keep Up With Cutting-Edge Tech
New construction equipment models may do the same job in less time. With equipment leases, your business can take advantage of modern technology to gain an edge over competitors.
4. Save Your Capital for Urgent Needs
Working capital is worth its weight in gold. When it’s time to bid on a project that’s larger than usual, purchase raw materials at optimal rates, or adapt to an emergency, you want to have cash available instead of tied up in equipment purchases.
5. Choose the Financing That’s Best for Your Business
Financial advisors should lay out a number of purchase options that offer distinct advantages. Direct purchase financing provides lower interest rates, while full-market-value (FMV) leases allow you to adapt more easily to changing needs.
6. Look for Seasonal Considerations
Not all lease agreements are alike, and financial experts can create a custom arrangement that’s perfect for your company. If your business tends to have seasonal high and low periods, loan payments can take this variability into account to keep you comfortable.
7. Guarantee Equipment Disposal
One of the biggest challenges with equipment purchases is knowing what to do when construction machinery eventually breaks down. Disposing of obsolete equipment isn’t something you need to worry about with a lease, however.
8. Request Asset Management
Equipment lease companies frequently offer asset management services. They keep track of usage patterns, mileage and other factors to determine when it’s best for your business to upgrade. This means less hassle for you.
9. Trust in Equipment Experts
Always look for a financing company that has experience with construction industry equipment. These experts may have contacts that can provide top equipment, with all the features you need, at excellent prices.
10. Plan for Expenses
By having a budget set aside for equipment financing, you can decide whether it’s advantageous from a financial and tax standpoint to opt for an equipment lease or direct financing for a lump-sum purchase.
Contact a loan expert for additional information about the right construction industry financing for your business.