The primary benefit in opting for heavy equipment financing is the ability it affords you to keep your cash flow positive; you can then use this working capital for other business endeavors. After all, in the construction business space, the machinery can be almost exorbitantly expensive and can become obsolete in just a few years’ time. By financing and/or leasing it, you free up capital and can much more profitably upgrade when it becomes necessary.
Qualifying for Heavy Equipment Financing
Although some of the necessary attributes vary by lender; the following are general and what you’d need for virtually any lender that offers heavy equipment financing. Keep in mind that the requirements below can supplant one another – that is to say, if one isn’t so good, another can make up for it:
Credit Worthiness: If you have a FICO score in the 600 range, then you’ll almost certainly qualify for this type of financing. However, there’s another requirement that is concomitant with this: you need to have been in the business for the past 12 months straight – give or take a month or two, depending on the lender.
Be Cash-Positive: Basically, your cash flow needs to be convincing enough for the lender to believe you have the ability to pay her back. Your revenues need to be higher than the price of the equipment by several orders of magnitude, which means they cannot be in the negative. You may need to engage in factoring receivables first if your cash flow is positive but too low.
Hefty Down Payment As a Substitute: If your credit score is subpar and your cash flow is minimal, then it is still possible to secure heavy equipment financing by putting up a hefty down payment. As an example, if you’re seeking to acquire construction equipment that costs $40,000, you may need to put down $13,000 in order to qualify. The interest rate, however, will still reflect your current creditworthiness.
Capital Finance Partners offers comprehensive equipment financing and leasing packages to businesses of every shape and size. Contact our offices today to get started.