Construction equipment is expensive. In order to provide your customers with all of the services they need, you need the tools to get the job done. As a contractor, that means purchasing the best equipment for your contracts to make sure you do a good job and finish on time.
Purchasing new, updated equipment is costly. It’s important to set up a financing plan to manage your costs effectively. Equipment financing is one way to cover expenses for your equipment purchases.
In this article, we are going to go over the difference between equipment leasing and equipment loans and discuss how equipment financing can help your construction company.
Equipment Leases for Contractors
Equipment leasing is a great option for construction companies. Sometimes you only need certain equipment for certain jobs. With an equipment leasing plan, you basically rent the equipment from a lender. At the end of your lease, you can return the equipment, extend the lease, or buy the equipment from the lender.
With an equipment lease, you borrow the equipment you need for your construction contracts and pay monthly payments. Your payment goes either directly to the equipment company or to their third-party financial company that handles their lease payments. You never see the money, and you don’t own the equipment unless you buy it from the lender at the end of the lease term.
An equipment lease is ideal for construction companies that are doing a special job for a project. Sometimes that one special job needs a unique, expensive piece of equipment. After you use it for that job, you might never need it again. It doesn’t make much financial sense to purchase that equipment outright.
By setting up an equipment lease, you can borrow the equipment you need and make monthly, tax deductible payments. That means you get the tools you need, when you need them, and then move on to the next job.
Equipment Loans for Contractors
Equipment loans are similar to traditional loans with the restriction that the money must be used on equipment purchases. Instead of getting a lump sum of money, the lender pays for the entire cost of the equipment you need, and you make monthly payments according to your loan agreement.
Different lenders offer different interest rates and repayment options. Like any financial decision, it’s important to consider the alternatives. Shop around and find the right loan to cover your construction equipment.
Equipment loans are beneficial for construction companies because it saves you from the burden of making large purchases all at once. By spreading out the payments over the terms of the loan, you can free up working capital for your other operating expenses.
Benefits of Equipment Financing for Contractors
Equipment financing is perfect for construction companies. Different jobs require different equipment, but purchasing every piece of equipment is impossible. With equipment financing, you can get the tools you need when you need them.
The biggest benefit of equipment financing is the flexibility it offers your contracting company. Instead of spending huge chunks of money on expensive equipment purchases, set up an equipment financing plan to free up your working capital. This allows you to always have the tools you need without using up your cash.
Your construction company needs to have the best equipment in order to get the contracts you need to succeed. If you want your clients to keep coming back, you have to offer them the services they want. Equipment financing is one, relatively quick, option for covering the equipment costs to get your jobs done.