Heavy Equipment Financing

Financing to Win a Bid

Contractors often need to commit to equipment before a contract is signed, or show they will have it when the job starts. Pre-approval for heavy equipment financing lets you bid with confidence and move fast once the award comes in. Some lenders will also weigh a signed contract when evaluating a newer company, since it shows where the revenue to make payments will come from.

Build the payment into your bid. A job that looks profitable on paper can lose money if the machine it requires sits idle once that job ends and no follow-on work is lined up.

Titles, Liens and Insurance

Many off-road machines are not titled, so lenders usually record their interest with a UCC-1 financing statement. On-road vehicles such as dump trucks typically carry the lender's lien on the title. Either way, expect to provide serial numbers and to keep the equipment insured with the lender named as loss payee. Job sites can be exposed to theft and damage, and some lenders ask about storage, security or GPS tracking.

Frequently Asked Questions

Can a new construction company finance equipment?
Yes, though expect tighter terms. Lenders may ask for a larger down payment, strong personal credit, a personal guarantee or proof of upcoming work such as signed contracts. Experience in the trade, even with a previous employer, can help.

Can attachments be financed?
Usually. Buckets, hammers, augers, grapples and other attachments can often be included with the machine or financed on their own.

Do equipment payments affect my bonding capacity?
They can. Sureties review financial statements, debt and working capital when setting bonding limits, so a large purchase paid in cash, or financed with heavy short-term payments, can change what you are able to bond. Talk with your surety and accountant before a major purchase.

Should I buy new or used heavy equipment?
Used machines cost less and are available sooner, but they may need more maintenance and often qualify for shorter terms. New machines carry warranties and usually qualify for longer terms. On any used unit, review hours, undercarriage wear and service records, and consider an independent inspection.

Explore Financing Options for Your Business

Look at your utilization, your bid pipeline and your slow season before you choose a structure. With realistic numbers in hand, you can compare heavy equipment financing offers on total cost and payment fit, and keep the machines you need working on the jobs that pay for them.

Heavy equipment financing lets contractors and other operators buy excavators, loaders, dozers, cranes and similar machines while paying for them out of the work those machines perform. For a construction company, the deciding question is rarely the rate alone. It is whether owning a machine beats renting it, and whether the payment can hold up through slow months between jobs.

This guide is written for general contractors, site work crews, utility installers, haulers and others who run heavy iron. It covers the rent-or-own decision, structures common in construction, seasonal payments, bidding, and what lenders need to see.

Equipment Covered

• Earthmoving: excavators, backhoes, wheel loaders, skid steers, track loaders, dozers and motor graders.

• Lifting: cranes, telehandlers, boom lifts and scissor lifts.

• Paving and compaction: pavers, rollers, milling machines and plate compactors.

• Hauling: dump trucks, articulated haulers, lowboy trailers and water trucks.

• Specialty: drilling rigs, trenchers, forestry machines and demolition attachments.

Rent, Own or Finance: Running the Numbers

Ownership pays off when a machine stays busy. Renting makes sense for equipment you need only a few months a year or for a single project.

Consider a hypothetical excavator. Renting costs $7,000 a month. Financing the purchase costs $3,900 a month, plus an estimated $8,000 a year for insurance and routine maintenance, for a yearly cost of about $54,800. If the company needs the machine nine months a year, renting would cost $63,000, so owning saves roughly $8,200 and builds equity in the machine. If it needs the excavator only three months a year, renting costs $21,000, far less than owning.

Use your own rental quotes, financing offers and utilization history. Also factor in resale value at the end of the term, transport costs, and the value of having a machine on hand when a job starts on short notice.

Financing Structures Used in Construction

• Term loans give you ownership and fixed payments. They suit core machines that work most of the year.

• Leases can lower payments and offer a simple exit at the end of the term, which helps contractors who want to cycle into newer, more fuel-efficient machines on a regular schedule.

• Rental purchase options, offered by some dealers and rental yards, apply part of the rent toward buying the machine. They let you test demand before committing, though the total cost is often higher than a straight loan.

• Fleet lines give larger contractors an approved amount to draw on for several machines over a period, which is useful when bidding season brings multiple purchases.

• Refinancing owned machines or selling them and leasing them back can free up cash for payroll, materials or mobilization costs.

Seasonal and Skip Payment Plans

In much of the country, construction revenue slows in winter. Some lenders offer payment schedules that follow that pattern, such as skipped payments during slow months, reduced off-season payments, or a deferred first payment timed to the start of a job. Paying less in winter usually means paying more the rest of the year, and total interest can be higher, so compare the full cost against a standard schedule.

Lenders that offer these plans usually want to see a history of seasonal revenue in your bank statements, so be ready to show how cash moves through your year and when your busiest months begin.