Construction businesses are only as strong as the machinery they rely on to get the job done. Without powerful excavators, bulldozers, and backhoes at their disposal, construction companies can’t expect to finish jobs efficiently and on schedule—it’s as simple as that.
Though heavy equipment is essential to the success of any construction outfit, the machinery itself doesn’t come cheaply. The average excavator, for example, will set you back anywhere between $100,000 and $500,000 when you buy a brand new model.
Unfortunately, covering these kinds of costs can be difficult for a variety of reasons, particularly considering that construction companies often face cash shortages as jobs run over budget and money is tied up in supplies, building materials, and wage expenses, among other things.
Whether your construction company is looking to buy new or used machinery or you opt to lease it, there’s a good chance you’re going to need a heavy equipment loan to cover your expenditures. After you’ve figured out how big of a loan you need for your construction business, start thinking about whether to apply for financing from a traditional banking institution or to partner with an alternative non-bank lender instead.
Before you head over to the nearest bank and apply for a heavy equipment loan, beware that traditional financial institutions are lending fewer dollars to smaller companies these days. Even if your business is one of the lucky ones to be approved for a loan, keep in mind that the median small business loan issued by big banks is somewhere between $130,000 and $140,000, according to the Small Business Administration. Unfortunately, that amount is unlikely to give you the flexibility you need to add the right machinery to your fleet.
Instead of spending a lot of time applying for a heavy equipment loan you probably won’t get in the first place, you are likely much better off trying to secure financing from a non-bank lender. Here’s why:
Your Application Will Be Considered Within 24 Hours
Once you’ve decided you need a heavy equipment loan, you don’t have the luxury of waiting around for an extended period of time before acquiring new machinery. To stay on schedule and continue growing your operations, you need to add equipment to your fleet—and quickly.
Whereas banks typically require construction business owners to fill out long applications and submit volumes of paperwork, you can complete the application process within 15 minutes when you secure financing from a non-bank lender. What’s more, these alternative lenders will let you know within a business day or two if you qualify. Once approved, money can be deposited in your business’s bank account right away—meaning you can start shopping for heavy equipment immediately.
You Can Secure a Much Larger Loan
As noted above, traditional banking institutions aren’t known to give small construction outfits enormous sums of money. Non-bank lenders, on the other hand, routinely fund small businesses up to $1 million—even if they have bad credit.
Heavy equipment isn’t cheap. If you need to add a number of machines to your fleet, you’ll find the financing you need from the right non-bank lender.
As an added benefit, once you’ve demonstrated the ability to repay your loan on time, you can unlock repeat customer benefits. In the future, should you need another loan to acquire additional equipment, you may qualify for more favorable terms.
You Won’t Have to Put Up Any Collateral
Most banks require borrowers to put up property or equipment in order to secure financing. That way, in the event they are unable to repay their loan and their business goes under, the bank is still able to get its money back.
Non-bank lenders do not require construction business owners to put up collateral to get a loan. In the event that the unthinkable happens and you can’t repay your loan, you won’t have to worry about losing your property. It’s worth noting that, due to the fact alternative lenders don’t require borrowers to put up any collateral, interest rates attached to their heavy equipment loans are slightly higher.
If you’re in the market for a heavy equipment loan, look no further than a non-bank lender with a sterling reputation. You’ll be able to get the money you need to best serve your clientele and grow your business.
So what are you waiting for? Apply for a heavy equipment loan today. You’ll be breaking ground with new machinery in no time.