Heavy equipment finance

For construction, industrial, and other heavy businesses, big is often better. Heavy equipment can get the job done when the lightweights have given up.

Chris Godfrey

Page written by Chris Godfrey. Last reviewed on July 19, 2024. Next review due October 1, 2025.

Unfortunately, big often comes with a big price-tag, and buying major pieces of plant and machinery can take a toll on company cashflow. However, equipment finance is available to take the strain. Choose a loan or lease to secure the big machines your business needs, then use the equipment as you pay for it – eliminate the financial pain.

What is heavy equipment?

Heavy equipment means self-propelled, self-powered, or pull-type equipment and machinery, including engines, weighing 5000 pounds or more. These types of equipment are primarily for construction, industrial, maritime, mining and forestry use, and they include earth-scrapers, backhoes, front-loaders, steer-loaders, dump trucks, cranes, asphalt and concrete equipment, treaded tractors, and more.

Should you finance or lease heavy equipment?

Businesses wishing to secure heavy equipment funding have two basic choices – heavy equipment finance (which means a loan), and heavy equipment lease (which means a long-term rental). Each option comes with its own pros and cons. Organizations should talk to their broker about the choice of heavy equipment funding that works best for their unique business circumstances.

Heavy equipment finance or heavy equipment lease, what’s the difference?

Heavy equipment financeHeavy equipment lease
AdvantagesYou’re building equity - the equipment appears as an asset on your balance sheet. You own the equipment at the end of the contract. You can depreciate the asset. No limit on your equipment’s hours and wear and tear with no overages to pay. Once you own it, you can use it as collateral for a new loan.May require a smaller upfront payment than a loan. Usually lower payments than a finance loan. Deploy equity elsewhere in your business instead of building equity in equipment. Simply pay for the use of the equipment, return it at lease-end, or exercise your purchase option. Lender may be responsible for maintenance and insurance.
DisadvantagesHigher monthly payments than leasing. (You’re paying off the full value of the equipment plus interest and fees). Depending on wear and tear, it may be difficult to economically dispose of the equipment when you wish to replace it. May require a higher upfront payment than a lease. Borrower usually responsible for maintenance and insurance.Does not build equity. May have no option to purchase at the end of the contract. Usually includes ‘wear and tear’ and usage limitations, where going over the limit can run up excess charges. Not all equipment may be available on a lease.

Benefits of heavy equipment finance

Heavy equipment may add great value to an organization’s operations and make the business more competitive and efficient, but major machinery does not come cheap. Often, the sticker price is tens or even hundreds of thousands of dollars for a single piece of gear. Paying this kind of money out of cashflow simply does not make business sense. Instead, heavy equipment finance – loans and lease contracts – can take away the economic pain. Spread the purchase cost over months or years – use the equipment as you pay for it, and enjoy a host of other business benefits:

Lower tax costs

Reduce your tax burden by plowing profits back into the business to secure heavy equipment that will make your business more efficient, return greater long-term profits, and add to shareholder value. A finance loan adds the equipment to your balance sheet as an asset, allowing you to depreciate the cost over time and claim the interest and fees as deductible expenses. Or you could choose a finance lease, where in most cases the entire monthly payment, (not just the interest), can be claimed against tax as a business expense.

Lower risk for construction businesses

The construction industry is prone to seasonal volatility. This increases the risk for construction businesses that pour big money into major machinery purchases. Heavy equipment finance helps construction companies preserve capital by spreading equipment costs over time, mitigating the uncertainty of seasonal variations or investing in capital assets that may not yield the returns originally imagined. In many cases, lease payments can be matched to the productivity of the equipment on the lease.

Access to capital

Even though an investment in heavy equipment may make them more competitive and efficient, many smaller organizations simply do not have the cash to buy expensive machinery. Heavy equipment finance provides access to important capital that businesses will typically be unable to acquire from investors or shareholders.

Are you able to finance used heavy equipment?

Yes. There is a thriving market for used heavy equipment in the US. The best equipment finance brokers can access funds for the purchase or lease of major pieces of new and used plant and machinery.

Get started with Swoop

Heavy equipment finance is a specialist area with differing rules of application and requiring deep knowledge of the sector from the lender. US SMEs seeking funding may find themselves forever searching and making applications to lender after lender without success. The delays this can create could cause them to lose revenue and leave their business vulnerable to competition. Instead, working with a broker, who can access heavy equipment financing from a wide range of lenders is a better way to go. No more cold calls and endless demands for information, just tell us what you need and leave the rest to us. 

Think big. Give your business the heavy equipment it needs to grow. Register with Swoop to find the best rates, the best terms and the best heavy equipment finance today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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