Despite the global supply chain challenges faced by construction companies—including rising raw material prices, shortages of building materials and lack of skilled labour—ResearchAndMarkets.com, the world’s leading source for international market research reports, believes things are looking up for the industry. It’s forecast to grow by 8.8% and reach $1.3 trillion this year, and continue growing steadily through 2026 when it’s expected to reach $1.6 trillion.
As more opportunities become available for construction companies, you may find yourself wondering if you can compete due to a lack of outdated equipment. Before throwing in the towel, it’s a good idea to look at construction equipment financing as a way to remain in the game, so to speak. Here are answers to some commonly asked questions about it.
What is construction equipment financing?
Construction equipment financing is financing for new or used construction equipment. It’s an excellent option for companies that lack the financial resources necessary to make a big one-time payment.
What kinds of equipment can be financed?
Any equipment needed for construction work, including cranes, stone crushers, backhoes, excavators, boom lifts, motor graders, bulldozers, dump trucks and even project software, can be financed. That includes construction equipment needed for sub-industries such as aggregates, crane and rigging, logging, road and bridge construction, and site prep and excavation.
What are the key benefits?
Construction equipment financing allows you to start projects promptly, manage them according to their specifications and finish them on time. No large down payment is required and monthly payments are predictable—while the equipment being financed is on the job-generating revenue. In addition, construction equipment financing can help you:
- Afford to replace worn-out equipment
- Keep cash for other needs
- Take advantage of tax savings
- Finance new construction business technology
What do you need to qualify for it?
Qualifying requirements are going to vary between lenders, but most are going to require at least one year in business, $100,000 in annual revenue and the owner to have a FICO score of at least 620 as a start. Additional lending criteria, on a case-by-case basis, will determine individual companies’ qualifications.
Is construction financing right for me?
If not having the right equipment to accept new work is holding you back, and you don’t have the resources to make outright purchases, the answer is certainly yes. Having the right construction equipment ensures maximum efficiency and quality as well as optimum use of labour and an increased level of on-the-job safety.
As the owner of a construction company, securing financing to purchase the equipment you need to be successful is a great strategy to build your business. Unlike traditional lenders like banks, whose application and approval process can be cumbersome and often end with a “no,” alternative lenders are in your corner and focused on helping you make your business dreams come true.