Crane finance

Just as there are many types of crane, so there are many ways to finance them. Popular crane finance options include:

Lease-to-own

The most common way to finance a new or used crane. With lease-to-own, you enter into a long-term rental agreement, making an initial down payment and then paying regular monthly payments over a fixed-term contract. When the agreement comes to an end, you buy the crane for either the projected residual value of the machinery at contract end – also known as a ‘balloon payment’ – or for an agreed final sum – which can be as low as R1. Lease-to-own may deliver significant tax advantages over traditional ‘hire purchase’ agreements, where you buy the crane in equal monthly instalments and no balloon payment at contract end.  With lease-to-own, crane maintenance, servicing and insurance costs are typically your responsibility, although some lenders may bundle these extras into the leasing cost.

Used crane financing

Buying or leasing a used crane that is in good condition and still has years of life left in it can be a cost-effective way to obtain the lifting machinery you need. However, be aware that some lenders may set strict age limits on used cranes, restricting the types of crane you can buy.

Auction finance

If you’re looking to buy a used crane at auction, your chances of success will be improved by obtaining pre-approval for an auction loan before you head to the auction house. Pre-approval for a loan up to a set limit gives you confidence to make a bid and ensures you can meet the crane’s purchase price without hurting cash flow. Once you buy the crane, the pre-approval converts to a standard term loan that you pay back monthly.

Working capital loan

Working capital loans are designed to cover dips in cash flow or fund extraordinary capital expenditures. Buying a crane falls into the latter category. Common working capital loans include:

• Term loan: You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Collateral may be required
• Business line of credit: Withdraw as much as you want when you want from a loan facility up to the limit of your borrowing. You only pay interest on the sums you withdraw, not the whole credit line. This can make the borrowing significantly cheaper. Collateral may be required.

Financing with poor credit

Organizations with weak credit may find it more challenging to buy or lease crane equipment, but it’s not impossible. Specialized financing programs for businesses with less than stellar credit include:

• Revenue based financing: An option for companies that have strong monthly revenues but a weak credit history. Borrow against the value of your revenues, using your varied income streams as security for the loan.
• Asset-based lending: Make better use of the equity you have in your existing plant and machinery. Tap their dormant value as collateral for a loan. Continue to use the equipment while you borrow against it. As soon as the loan is paid off, the lender’s lien is released.