Equipment financing
Heavy Equipment Financing
Finance excavators, dozers, loaders, cranes and other heavy and construction equipment for your business, with the machine as collateral. SMB Compass works with a network of funding partners to find financing that fits the machine and your cash flow.
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What is heavy equipment financing?
Heavy equipment financing is a loan or lease used to buy large machinery such as excavators, dozers, wheel loaders, cranes and haul trucks, with the machine itself as collateral. Construction equipment financing is the same product seen from the contractor’s side, so this page covers both. For the basics that apply to every kind of equipment, start with our equipment financing guide.
Heavy machinery is one of the easier business assets to finance, because it has a deep resale market and a lender can price against it. It is also easy to get wrong: contractors often finance a machine over a term longer than the work that justifies it, then carry the payment through an off-season with nothing on the books. The sections below explain how lenders actually look at a machine, what terms to expect and what to check before you sign.
Heavy and construction equipment you can finance
- Earthmoving: excavators, skid steers and compact track loaders, backhoes, dozers, wheel loaders, graders.
- Lifting and material handling: cranes, telehandlers, boom and scissor lifts, large forklifts.
- Hauling: dump trucks, articulated haulers, water trucks and lowboy trailers.
- Site and finishing: compactors and rollers, concrete mixers and pumps, generators, light towers, compressors.
- Quarrying, forestry and agriculture: crushers, screeners, skidders and large tractors; see farm equipment financing for agricultural machinery.
- Attachments: buckets, breakers, augers and grapples, often financed together with the machine rather than separately.
How lenders underwrite heavy equipment
The first question is not your credit score. It is what the machine would be worth at auction if the lender had to take it back.
- Auction comparables. Lenders price against realized auction values for the same make, model and configuration. A common model with many comparable sales is easier to finance than a niche machine with few.
- Hours, not years. On most machines the hour meter drives value more than age. A six-year-old excavator at 3,000 hours is a different asset from a three-year-old one at 9,000, and lenders treat it that way.
- Condition and inspection. Private-party and auction purchases usually need an inspection. Dealer purchases with a warranty tend to move faster.
- Your book of work. Signed contracts or a pipeline that justifies the machine carry real weight, because the payment has to survive the slow months.
- Time in business and cash flow. Two years or more opens the widest pool of lenders. Newer businesses can still be financed, usually with a larger down payment or a shorter term.
Typical terms by machine class
Term length tracks how long the machine holds its value. These are common ranges; an actual offer depends on the machine’s hours and condition, the amount and your business profile, and all financing is subject to lender approval.
| Machine class | Common term |
|---|---|
| Cranes and large lifting equipment | 60 to 84 months |
| Dozers, wheel loaders, graders | 48 to 72 months |
| Excavators | 48 to 72 months |
| Dump trucks and haulers | 36 to 60 months |
| Skid steers and compact track loaders | 36 to 60 months |
| Compactors, generators, light towers | 24 to 48 months |
| Attachments | 24 to 36 months |
Before you accept a longer term, run the numbers in our equipment loan calculator: stretching a term lowers the payment but raises the total cost. If you want to put less down, no money down equipment financing explains what that trade-off looks like.
New, used and buying at auction
Most heavy equipment changes hands used, and lenders are comfortable with that within limits. Many cap the age of a financed machine at roughly eight to ten years and set hour limits by class.
Auction purchases can be financed, but it is tighter: some lenders won’t fund a sale without a pre-purchase inspection, and auction settlement windows are short, so have approval in place before you bid. Used equipment financing and leasing covers age limits, inspections and private-party sales in more detail.
Plan for the off-season
A monthly payment doesn’t pause for a northern winter or a wet spring. A common problem is a machine financed against one strong season on a term that runs through several weak ones.
Two structures help. Some lenders offer seasonal or skip-payment schedules, with fewer payments in slow months, priced accordingly. Otherwise, a business line of credit alongside the equipment loan can cover the off-season without stretching the term on the machine. If your gap comes from progress billing rather than the seasons, construction factoring addresses that directly.
Loan, lease or SBA 504
Equipment loan. For heavy machinery the default is usually a loan, because most businesses keep machines through their working life and the resale value is worth owning.
Lease. Leasing earns its place for equipment you replace on a short cycle, or where keeping the payment off the balance sheet matters for bonding. Talk to your surety before you sign either way. Equipment financing vs. leasing walks through the full comparison.
Tax. Buying with a loan makes you the owner from day one, which can open depreciation and a Section 179 deduction. The IRS sets the deduction limits each year; see IRS Publication 946 and talk to your accountant about how it applies to you.
SBA 504 for larger projects. Where a machine purchase sits inside a bigger construction or expansion project, the SBA 504 program can finance machinery and equipment together with real estate as eligible fixed assets, which can mean one longer repayment schedule instead of a short equipment note alongside a mortgage.
What to check on a heavy equipment quote
- APR or factor rate? They are not the same and can’t be compared side by side. If you are quoted a factor rate, convert it before you decide.
- Balloon or residual payment. A low monthly payment with a lump sum at the end is a legitimate structure, but only if you have planned for that final payment.
- Fees. Documentation, origination and UCC filing fees belong in your comparison.
- Prepayment. Ask whether interest is simple or precomputed. With precomputed interest, paying early saves less than you’d expect.
- What the lender files against. A blanket lien on all business assets is very different from a filing against the single machine, and it affects your ability to borrow elsewhere.
- Insurance. Lenders require coverage naming them as loss payee. Get the insurance quote before closing.
How to apply for heavy equipment financing
- Get the machine details. Make, model, year, hours, serial number and the seller’s quote or invoice.
- Apply online. One short application tells us about your business and the equipment you want.
- Share your bank statements. Recent business bank statements, plus contracts or a schedule of upcoming work if you have them.
- Compare your options. We review your application with our network of funding partners and walk you through the offers you qualify for, subject to approval.
Heavy equipment financing FAQs
Can I get a loan for heavy equipment?
Yes. Heavy equipment loans and leases are widely available because the machine secures the financing. Approval depends on the machine’s resale value, your cash flow, credit and time in business, and is always subject to lender review.
How hard is it to get heavy equipment financing?
Usually easier than unsecured financing, because lenders can recover value from the machine. A common model with low hours, a few years in business and steady deposits make it easier; a niche machine, a new business or weak credit usually means a larger down payment or a shorter term.
Is construction equipment financing the same as heavy equipment financing?
For most purposes, yes. Both finance large machinery secured by the machine itself. Contractors tend to say “construction equipment”, and the same lenders and structures apply.
What are the best ways to finance construction equipment?
For machines you’ll keep, an equipment loan is usually the simplest. A lease can suit equipment you replace often, and an SBA 504 loan can suit a machine bought as part of a larger real estate or expansion project. Compare the total cost of each, not just the payment.
Can I finance heavy equipment with bad credit?
Often, because the machine secures the loan, though expect a larger down payment, a shorter term and a higher cost. Equipment financing with bad credit covers the options.
Can a new contractor finance equipment?
Some lenders work with businesses under two years old, especially with a signed contract that justifies the machine, a meaningful down payment and a common model with strong resale value. See equipment financing for newer businesses.
Does financing cover delivery and attachments?
Usually, when they are on the dealer’s invoice: freight, attachments and setup can often be included. Costs you pay separately to third parties are harder to include.
How fast can heavy equipment financing close?
It depends on the lender and the deal. Dealer purchases with complete paperwork can fund within a few business days; private-party and auction purchases take longer because of inspection and title work.