In a market of tough competition for construction jobs, the right machine and financing is essential for being competitive. Here are tips to consider as you choose to embark on financing your construction equipment
Clear corporate accounts naturally help make the solvency of your business clear to any bank or finance company, with records of your accounts and current contracts. Records of your fleet assets and sales of used equipment can also be important.
- If you’re declined
If your loan application is declined, try to find out the exact reason. It may be something that can be quickly rectified, or you may need to work on improving your credit profile.
- Finance assets
Having finance for equipment rather than a general business loan normally means a lower interest rate. Likewise, finance for road going equipment or a large machine that has registration may be easier to obtain financing for than a general plant; depending on the market, this may require a commercial mortgage.
- Keep your kit serviced
A lender financing your purchase over a longer term may want to inspect your current equipment fleet in order to see how the asset will be maintained for the duration of the loan. Having a well-maintained fleet of equipment makes them more likely to agree to the loan, or even to longer terms.
- Better residuals
Finance companies are normally more eager to finance purchases of well-known brands that have established residual value; lesser-known machinery brands may take it upon themselves to educate financial companies about their machine.
- Warranty and service contracts
A service contract or lengthy dealer warranty can reduce the risk to the lender that the equipment will break down. This should provide them with better security that the machine will keep working and keep earning you money, so could qualify you for a lower financing rate.
- Dealer finance
Many equipment dealers have associations with finance companies or banks (some with more than one). This can streamline the financing process, since the financier has experience with equipment financing and understands the value of the equipment you want to buy.
- Shop around
Finally, after optimizing the credit profile of your business, shop around for the best deal. As in any industry, finance companies will meet you in the middle to retain you as a customer or win your business.
- SME Special programmes
In some markets, special assistance programmes are available for smaller companies (SMEs), whether from the government or even from a dealer.