The Advantages of Construction Equipment Financing

For many construction companies, acquiring equipment and machinery while maintaining cash flow is a delicate balancing act. As a result, many business owners choose to obtain the tools they need through construction equipment financing.

Banks and specialized lenders have become the providers of capital for equipment financing in the United States, which has added stability to this growing market segment. These financing companies have adopted a relationship-based approach, which has enabled them to structure deals that help customers manage their overall credit and cash flow needs.

Here are some benefits of construction equipment financing:

Flexible Financial Packages

Banks and financing companies offer financial packages that allow businesses to meet their accounting and cash flow needs. Interest rates are available at fixed or variable rates. Additionally, customized payment structures can be implemented, which will match the lifespan of equipment.

Capital Preservation

Purchasing equipment exposes a business to financial risks, especially if the asset does not provide a return on investment. Leasing equipment eliminates exposure to inefficiency while protecting cash flow.

Expense Planning

Construction equipment financing helps companies maintain predictable cash flow. Businesses can determine the tax implications of various financing options. Loan and lease payments can become a regular part of the bill payment process.

Business Cycle Accommodations

It is not uncommon for equipment leases to account for business cycles. Some leases have lower payments at the beginning of projects, when income hasn’t been generated. Seasonal fluctuations and other circumstances can also be taken into account.

Managed Obsolescence

When companies buy equipment, they assume responsibility for it throughout its life cycle. Conversely, leasing gives companies access to the newest models when they become available. When it is time to upgrade, the leasing company disposes of the old equipment and swaps in newer models.

Asset Management

Many financing companies monitor the use of leased equipment. Their state-of-the-art tracking systems know where every asset is deployed and how it is utilized. The system also identifies which pieces of equipment are due for upgrades or scheduled maintenance.

Expertise

Many equipment financing companies specialize in certain industry segments, such as IT and heavy machinery. They also have established relationships with manufacturers and distributors, which will help firms obtain products and services that suit their business.

Construction equipment financing enables you to grow your business while you manage your equipment needs. By working with the right lender, you will be able to design a financial plan that will provide you with access to the tools you need while you manage obsolescence and retain a stable cash flow.

 

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