Who does commercial power equipment go through for financing?

Regardless of your industry, the highest probability is that you rely on some type of equipment to help clients and customers. From industrial equipment to cutting-edge technology, having access to the best gear available can go a long way for your company. When you require new equipment to continue running (or improving) your business, you have two options—purchase it outright, or consider commercial equipment financing. Generally, commercial equipment financing takes the difficulty out of purchasing new equipment by easing cash flow problems. Instead of paying upfront, you can get new equipment right away and pay it down over time.  Here is what you can expect when it comes to commercial power equipment financing. 

How commercial power equipment financing works?

Before getting into particulars about commercial power equipment financing programs you might qualify for, it is important to understand the basics. Simply put, this business financing option allows you to purchase new power equipment for your business (which you will then own) and pay back the lender over time.

By doing so, you can get the new power equipment you need right away. Whether you want to replace old power equipment or purchase new equipment to grow your company, this can be a game-changer. Commercial power equipment loans (though they are actually considered financing, not loans) do not normally require collateral. In most situations, the power equipment itself serves as the collateral. In the event you default or can not make payments, lenders reserve the right to take the equipment.

 Nonetheless, you might have to guarantee the equipment as well, personally. This indicates that you would still be held personally accountable for payments in the event your company defaults. You can finance up to 100 percent of the equipment’s cost through many business financing programs, with no upfront fees.  Contrarily to commercial power equipment leasing, you pay the owner rent—financing power equipment enables you to own it. After you have finished making payments, that equipment is yours. 

You can make excessive use of used equipment financing programs, where you finance equipment from resellers. Commercial power equipment financing comes with tax benefits for small company owners, too. Typically, you can write off the full cost of the power equipment in year one, but you are not out of luck if you have other deductions. For up to twenty years, you can carry over deductions.

What industries can take advantage of commercial power equipment financing?

Small business equipment financing is not limited by industry. In fact, companies in almost all industries can take advantage of these programs. For instance, commercial fitness equipment financing can help a gym to purchase additional exercise machines.  Commercial lawn equipment financing might help a landscaping company double its revenue by funding machinery for a second route.  And of course, construction equipment financing helps contractors take on new projects that they currently lack the tools for (without losing money on leasing).

Here are some of the most common fields that take advantage of commercial power equipment financing:

  • Medical (including dental): Private practices usually finance new power equipment that improves patient care
  • Construction: Many contractors buy additional power equipment to take on high-paying jobs 
  • Rental fleet: operators can make excessive use of financing power equipment.
  • Restaurants: Big restaurants that need to replace outdated power appliances such as slushy machines to streamline things purchase new equipment 
  • Manufacturing: When manufacturing companies grow and/or take on new clients, many require new machinery 
  • Cannabis: Commercial power equipment financing can help cannabis companies purchase new equipment as they scale, and demand increases
  • Light Industries: light industrial equipment ranging from skid steers and trenchers to chippers and stump grinders can be financed through commercial power equipment financing

Types of equipment financed through commercial power equipment financing

You can finance an extensive variety of power equipment that you need to stay ahead of the competition through commercial power equipment financing. Some of the most common equipment financed under this program include:

  • Commercial Mowers
  • Skid Loaders
  • Wood Chippers
  • Trenchers
  • 2-Cycle Equipment
  • Stump Grinders
  • Construction Equipment
  • Earth Movers
  • Air Compressors and Blowers
  • Power Equipment & Construction Accessories

Small business equipment financing: Terms, rates, fees and more

Now that you understand how commercial power equipment financing works, what can you expect?  The terms, rates, and amounts are based entirely on your company, history, and the power equipment you are looking to finance.  Generally, equipment financing works differently than other small business loans and financing alternatives, so the expectations are not exactly the same. If new machinery will help grow your business, though, then commercial power equipment financing is possibly the ideal option.

Typically, you can finance the entire cost of the equipment, instead of only a fraction. The majority of trustworthy equipment financing companies also do not charge any upfront fees.  Interest rates will be based on your company’s financials, including annual sales, credit rating, and previous debt payment history. The stronger your business financial profile, the better offers you can get. In the same vein, the loan term will be determined depending on your business history. Whereas different options may be available to every company, you can qualify for terms as short as one year or even as long as five years. 

Some banks and commercial equipment financing companies limit your buying options. For instance, GE commercial equipment finance companies deal exclusively with General Electric equipment. Nonetheless, most trustworthy equipment financing companies should enable you to buy equipment from any vendor.  An equipment financing calculator can help you to get a better understanding of your payback rates, amounts, and terms. 

What are the requirements for commercial equipment financing?

Are you looking to buy shiny new equipment for your small business?

Qualifying for commercial power equipment financing is not a clear-cut process. The qualifications will vary based on your company and goals; however, there are a few boxes you must check off. First, let us dive into credit rating requirements.

As a business owner, you can typically qualify for an equipment financing program with any credit profile. With that being said, a higher credit rating (above 650) will always provide you better options. Despite your credit score, though, most commercial power equipment financing companies will have options available.

Your small company’s annual revenue can also play a part in evaluating what you qualify for. Programs for cheaper power equipment might not have sales minimums, whereas programs for financing more expensive power equipment might. Typically, having over $120K in annual sales puts your business on the fast-track to obtain the best approvals, even though options are certainly accessible to newer companies with lower sales.

 The same goes for how long you have been in business. When it comes to equipment financing, there are no strict requirements for time in business; however, more established companies tend to qualify for the other requirements. Before getting your options, most equipment financing companies will request financial statements to find more information about your company. At Top Financial Resources, you will only have to submit bank statements and potentially your most current tax return. Other marketplaces and small business equipment financing companies might request more information.

Pros of Commercial Power Equipment Financing

  • Financing your power equipment is a great way to jump-start your venture. There are many options available for financing to fit your business-specific needs.
  • Financing your power equipment can be key as it affords you the opportunity to hire employees, promote and build your company, and to buy reliable and high-quality commercial power equipment.
  • Long-term loans vary from financing company to another but typically have long maturities for your major business expenses involving your equipment needs.
  • Commercial manufacturers offer industry-specific financing through your local dealer. This can even be planned at the time of your purchase, making it incredibly easy to buy commercial power equipment.

Cons of commercial equipment financing

  • As a start-up company, you might find it challenging to get a loan. However, that does not mean it is impossible, either. Financing is available, even for start-ups; however, you have to do your homework. Be organized and prepared. Research your power equipment needs entirely and know exactly how much money you will need to get started. Also, a good credit rating is vital.
  • Generally, longer repayment periods might make your payments smaller; however, it also means you will pay more interest in the long run. If you can manage it, a large down payment can lower your monthly and annual payments.

Generally, financing your power equipment can have its advantages and drawbacks. But if you are inclined to do the research and find a lender who is inclined to work with you towards your company goals, you can have a successful business with all the right equipment in no time.

Learn your options in minutes, get commercial power equipment finance in hours

If your small business needs new commercial power equipment, then there is no sense in waiting to get the ball rolling. At Top Financial Resources, we can help you explore your commercial power equipment financing options in minutes. After completing a quick, one-minute application, you will be contacted by a Business Financing Advisor who will work to understand your business needs and guide you through your financing options.  Our process is quick, simple, and easy.  Get started today by applying now!

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