Bulldozers. Dumpers. Concrete pumps. Forklifts, excavators, backhoes, loaders, jackhammers. This is just a short list of things business owners in the construction field may need. All that equipment can get expensive… And if you own your own business, there’s a lot of factors for you to consider when it comes to getting the equipment that you need. Is construction equipment leasing right for you? What are the benefits of a heavy equipment lease?
Maybe you need new equipment, but are looking at the books and realizing that you just can’t afford it. Leasing could be just the option that you need.
Benefits of Leasing
Construction equipment is constantly updating. When you buy, that’s the equipment that your company is stuck with until however long it takes for you to buy updated machines or tools.
It’s also likely that you’ll be able to get a tax credit for your equipment lease. According to Section 179, they qualify as business expenses that are tax deductible.
When your construction equipment leasing period is over, you can return the equipment, or choose to buy the equipment for a discounted price depending on how much you paid during your lease and the policies of who you’re leasing from. Maybe by that time, you’ll want to invest in a new forklift that has improved in technology. Or, you could have decided that you’re happy with the one you’ve been leasing now that you have had the time to test it out.
How to Get Started
When you’re considering leasing business equipment, take some time to sit down and ask yourself a few questions to prepare.
What does your monthly budget look like? Obviously, buying is usually a one-time expense. But construction equipment leasing requires you to pay monthly, so you need to make sure that it will be available in your monthly cash flow.
It’s also very important to make sure you calculate how long you’re going to be using your equipment. For equipment that you’re only using for a short-term project, leasing makes obvious sense. But if you’re looking at using the equipment for longer than three years, you might want to more carefully weigh your options of leasing versus purchasing.
When you lease, many lessors don’t require you to make a large down payment. If they do, you might want to shop around for someone that’s offering a better deal.
You also will want to ask yourself if there is any new technology that is about to emerge in the specific equipment you’re going to be buying. This isn’t always something that you’ll be able to predict, but if the current model has been on the market for a long time, it’s likely that a new one will be set to release soon.
Most every piece of construction equipment qualifies to be leased – if it’s a hard asset. This is considered something that can be thought of as personal property. Warranties and training programs do not qualify. You may also be faced with a minimum purchase requirement. These can range anywhere from $25,000 to $50,000.
The Process of Construction Equipment Leasing
After you’ve chosen with company you’re going to be using to get the funds for your construction equipment leasing, you will submit an application for an equipment lease. Your financial data will be required either upfront or after the completion of this application. To streamline the process, make sure you have this information available in advance.
Depending on the company, your application will take one to two days to process. The lessor will let you know about the result of your application within this time frame.
If your application is approved, you will review the structure of the lease and finalize that this is the lease that you’re agreeing to. Take time to carefully review the documents and make sure that no extra stipulations have been added that you did not initially approve of. This is where you’ll set the amount of your monthly payments and the APR.
Next, you’ll sign the document and turn them into the lessor. When you submit the document this time, it’s typical you’ll also turn in your first lease payment.
When these documents and the payments are accepted, the lease comes into effect. This is when you will be able to get your construction equipment.
Choose the Right Lessor
When you’re searching for a lender for construction equipment leasing, you should research their company in depth. As a general rule, you might want to think about assessing the business in the same way as you might expect someone to assess your own business.
Search public records to see if they have any pending litigation involved with their company, which is a red flag. You can also gauge the company by looking at how much paperwork they require. There should be a reasonable amount with a relatively easy process. If there is a huge amount of work required for you to do, you might be wary of the company.
At TopMark Funding, we help you along every single step of the way. When you need construction equipment, you might feel overwhelmed by all the options available to you, and all the details of acquiring it.
Our job is to take the guesswork out of the game. You can get qualified and approved on the same day, and talk with our experienced professionals to go over all the options available to you. We can tailor fit a program that fits your individual needs as a business owner. Don’t get caught up in all the little details. Get the equipment that you need, and continue growing your business today.