Wondering what heavy equipment loan is and how it works? To allow a borrower to purchase heavy machinery, such as excavators, a lender or an equipment financing company in Abbotsford provides funding for a heavy equipment loan. Lenders offer these loans to small businesses operating in the construction or similar industries but don’t have the money or funds to buy the equipment upfront.
You have two options when using equipment finance:
- Leasing the equipment
- Taking out an equipment finance
If you have opted for financing, the borrower repays the loan plus interest over a pre-decided period of time. In heavy equipment finance arrangements, the heavy machinery itself usually acts as collateral for the funding. By doing this, you might avoid having to pay the full amount upfront for the gear or other equipment you might need to run, expand, or profit from your business.
Which Equipment Is Considered Heavy Duty?
Any type of gear used for earthmoving, building, or other heavy-duty jobs requiring a lot of force is considered heavy-duty equipment. Heavy-duty construction machinery such as bulldozers, tractors, excavators, forklifts, and engineering equipment are typical examples.
Even if you have the cash on hand to purchase the equipment you require for the construction site, it might be a wise decision to use heavy construction equipment financing. Your financial flow can then be allocated to other beneficial sources.
Businesses involved in agriculture also employ this kind of funding. Farmers employ costly machinery to boost productivity, which raises turnover.
3 Types of Equipment Financing
- Debt financing: It includes borrowing a one-time, fixed amount from the lender and repaying it over time in compliance with the loan terms. It works similarly to a typical installment loan.
- Equity financing: You receive funding as part of an equity financing in return for a portion of your company’s equity; you are not obligated to repay the funds.
- Combination financing: This type of financing combines the two. This can occasionally mean accepting funds in exchange for company stock, with the understanding that at least some of the funds will be returned at a later date.
Since leasing doesn’t necessarily result in ownership, all three of these are distinct from leasing. For example, a leasing agreement pays for the equipment instead of you getting paid and purchasing it. At the conclusion of your lease term, you won’t be responsible for any payments, but you also won’t own the equipment.
If you are looking for a reliable equipment financing in Abbotsford, look no other than Sandhu & Sran Leasing & Financing. Contact us to get your heavy equipment financed in no time.
