Best Construction and Heavy Equipment Financing Loans
Construction and heavy equipment loans help businesses get the gear they need without having to put all the cash down upfront.
| Lender | Best for | Starting rate | Amount | Term | |
|---|---|---|---|---|---|
|
Low starting rates | 6.50% | Starting at $25k | Up to 60 months | |
|
Construction companies | Not specified | Starting at $100k | Not specified | |
|
Startup businesses | 4.99% |
$500 – $2M |
12 – 84 months | |
|
Trucking businesses | Not specified |
$10k – $1M |
Up to 108 months | |
|
SBA loans | Not specified | Up to $2M | 24 – 60 months | |
|
Low upfront costs | Not specified | Up to $150k | Up to 120 months | |
|
Short-term loans | 32.72% (APR) |
$5k – $250k |
Up to 24 months |
Best heavy equipment financing: More details
Best for: Low starting rates – Bank of America
- Can be used for a wide range of heavy equipment, including commercial vehicles over 2.5 tons
- Bank of America Preferred Rewards customers may qualify for interest rate discounts
- Offers loans, leases and lines of credit
- Doesn’t publicly disclose minimum credit score requirements
- Origination fee of 0.50%
- Slow times to funding (up to 10 days) after loan approval
Bank of America offers unusually low starting rates, and borrowers may be able to lock in even lower rates by participating in the bank’s Preferred Rewards for Business program, which rewards loyal customers with rate discounts of 0.25% to 0.75%.
To become a Preferred Rewards member, you’ll need to have a business checking account with Bank of America. The specific discount you receive will depend on your membership tier, which is determined by your account balance.
The bank also stands out for its versatile equipment financing options, offering traditional loans, leases and lines of credit, providing businesses with multiple pathways to finance essential equipment.
Keep in mind that not all borrowers qualify for the lowest rates — your credit score, business history and loan terms are a few of the things that affect your rates.
In order to qualify, you’ll need to meet Bank of America’s criteria of:
- Minimum time in business: 2 years
- Minimum annual revenue: $250,000
Bank of America doesn’t disclose its minimum credit score requirements. Apply online or contact the lender directly to determine if your business qualifies for a loan.
Best for: Construction companies – Wells Fargo
- One-stop shop to find and finance new and used equipment
- Loan payment terms, like seasonal and balloon payments, can be customized
- In-person locations available throughout the U.S.
- Doesn’t publicly disclose interest rates or loan terms
- Relatively high minimum loan amount means borrowers seeking less than $100,000 will need to look elsewhere
With loan amounts starting at $100,000, Wells Fargo Bank is a reliable choice for well-established construction businesses. What makes the bank stand out is its understanding of the varied cash flow patterns in the construction industry. By providing flexible financing options, including balloon or seasonal payments and even sale and equipment leaseback transactions, it caters to the construction industry’s unique needs.
Additionally, Wells Fargo Bank isn’t just a financial lender — its Equipment Seller department allows businesses to purchase both new and used equipment and industrial gear.
Best for: Startup businesses – Taycor Financial
- Simple, one-page application can be completed entirely online for loans up to $400,000
- No tax returns required for loans up to $400,000
- Requests for loans up to $150,000 may be approved in as little as two hours
- Requires first and last payment in advance on equipment leases
- Applications for larger loan amounts may require additional documentation
- Origination and documentation fees may apply
Getting financing can be tricky for startups and early-stage construction businesses, as many lenders require you to be in business for at least two years to qualify for a loan or lease. But Taycor Financial is an ally for startup businesses, offering a new business program for companies that have been operating for less than two years.
With loan amounts ranging from as little as $500 to up to $2,000,000, the lender offers heavy equipment financing for businesses at every stage of development. Prospective borrowers can apply for up to $400,000 with a simple online application, though loans over $400,000 may require additional documentation, including tax returns and financial statements.
In order to qualify, you’ll need to meet Taycor Financial’s criteria of:
Minimum annual revenue: No specific minimum
Minimum credit score: 550
Minimum time in business: Not required
Best for: The trucking industry – Commercial Fleet Financing
- Financing may be available to customers with prior liens, judgments or bankruptcies
- Loans may be approved in as little as 24 hours, with funding in the bank within two business days
- No down payment required for customers with excellent credit
- Doesn’t publicly disclose interest rates
- Borrowers with past credit problems will need to come up with a down payment
Commercial Fleet Financing (CFF) is best known for offering semi-truck and trailer financing, though the lender also offers construction equipment financing. With loans ranging from $10,000 to $1,000,000 and options for term lengths, payment structures and loan and lease programs, Commercial Fleet Financing (CFF) tailors funding to the unique demands of the trucking and construction industries.
They understand the challenges business owners face in this sector, and even those with prior liens, judgments and bankruptcies may qualify for financing. However, a down payment may be required for borrowers with bad credit.
In order to qualify for a construction equipment loan, you’ll need to meet Commercial Fleet Financing (CFF)’s criteria of:
- Minimum credit score: Typically 640. You may be able to get approved with a lower score if you provide additional information during the application process.
- Minimum time in business: Typically 2 years, though like above, this doesn’t appear to be a hard rule.
You’ll also need to meet the company’s annual revenue requirements, which are not publicly available. Apply online or contact Commercial Fleet Financing (CFF) directly to determine if your business qualifies for heavy equipment financing.
Best for: SBA Loans – U.S. Bank
- Multiple funding options available, including equipment financing and SBA loans
- Additional financing provided for installation, tax and freight costs
- Flexible payment structure allows you to schedule payments on a monthly, quarterly or semiannual basis
- Doesn’t publicly disclose interest rates or loan requirements
- Application-only process can only be used for transactions up to $2,000,000
U.S. Bank offers equipment financing up to $2,000,000, but if you don’t meet the requirements for this type of financing, you may be able to work with the lender to secure an SBA loan instead. The U.S. Small Business Association (SBA) partners with lenders to offer loans to small businesses that might not otherwise qualify for financing.
As an SBA Preferred Lender, U.S. Bank has a streamlined application process. This may make it faster and easier to get an SBA loan — a perk that is particularly valuable, as SBA loans can take two or three months to process with other lenders.
Best for: Low upfront costs – National Funding
- No down payment required
- Submit an application and receive your funds in as little as 24 hours
- Financing options for a variety of credit profiles
- Doesn’t publicly disclose interest rates
- Lowest maximum loan amount on this list
- High annual revenue requirement might make it difficult for new businesses to qualify
With a low-payment guarantee on equipment leases and no down payment requirement on equipment loans, National Funding offers relatively low upfront and ongoing costs for funding.
National Funding’s equipment financing is capped at $150,000, which means borrowers looking to finance large, specialized equipment may need to look elsewhere. But if your equipment needs are less expensive, National Funding may give you the financing you need while keeping costs low.
In order to qualify, you’ll need to meet National Funding’s criteria of:
- Minimum time in business: 6 months
- Minimum annual revenue: $250,000
Although National Funding does not disclose the credit score needed to qualify for heavy equipment loans, the lender is willing to work with borrowers with a variety of credit profiles. For those with bad credit, loan decisions will be based on time in business and annual gross sales.
Best for: Short-term loans – OnDeck
- Quick, 10-minute application process
- Same-day funding in certain locations means you won’t have to wait to get the equipment you need
- Early prepayment may be available
- Short-term loans require daily or weekly loan payments
- High interest rates and other fees can drive up the cost of borrowing
If you need fast funds, OnDeck might be the lender for you. OnDeck is an online small business lender offering term loans and lines of credit, both of which can be used to purchase business equipment. What makes OnDeck unique is its funding speed. While lines of credit can be funded instantly, term loans may be funded the same day in certain locations.
However, these funds will need to be repaid within 24. This is a relatively short repayment period, meaning OnDeck’s financing options are best suited for borrowers with short-term needs. If your cash flow is low but you expect it to increase in the near future, OnDeck may provide the capital you need to purchase essential equipment.
And if you’re able to pay off your loan early, you may be able to get any remaining interest waived without any fees or penalties. Check your loan details before signing to see if you’re eligible for early repayment.
What is heavy equipment financing?
Heavy equipment, also known as heavy machinery, refers to large, heavy-duty equipment used across multiple industries, including construction and farming.
Heavy equipment financing helps businesses get the machinery they need to operate. This includes cranes, bulldozers and excavators. As a type of asset-based financing, the equipment itself acts as collateral to secure the loan.
Heavy equipment financing allows small business owners to spread out the cost of expensive equipment, freeing up capital for other business expenses.
Financing vs. leasing heavy equipment
When acquiring equipment, businesses often have two options: equipment financing or equipment leasing. Financing, also called an equipment loan, allows you to purchase the equipment and pay for it in monthly installments. Once the loan is paid off, your business owns the equipment and it becomes an asset on your company’s balance sheet.
Leasing is akin to renting the equipment for an extended timeframe. At the end of the lease term, your business may have the option to return the equipment, purchase it or renew the lease.
| Heavy equipment financing | Heavy equipment leasing | |
|---|---|---|
| Monthly payments | Higher | Lower |
| Monthly cost breakdown | Fixed principal plus interest | Fixed lease payment |
| Is depreciation tax deductible? | May be tax deductible | May be tax deductible depending on the lease type |
| Who owns the equipment? | The borrower | The lender |
| Can I trade in equipment or does it become outdated? | May become outdated | Can trade in |
Keep in mind that taxes vary by state, and this isn’t tax advice. If how equipment is taxed is a major factor in your decision to lease or buy, consult with a CPA to determine the best options for your business.
Pros and cons of heavy equipment financing
PROS
- Access advanced equipment you may not be able to afford out of pocket
- Predictable, recurring payments free up cash flow for other business expenses
- Potential tax write-offs can help you save on your heavy equipment
CONS
- May require a large down payment
- Some lenders may require additional collateral or a personal guarantee to secure the loan
- Equipment may become outdated and need to be replaced
How to get a heavy equipment loan
To get a business loan for construction or equipment:
-
Assess your needs and budget
Before you begin the application process, take a moment to evaluate what kind of equipment you need and how it fits your business operations. Consider things like the lifespan of the equipment, how often you will use it and the return on investment you expect it to bring. -
Get the essential documents ready
Most lenders have requirements for business loans that include a range of documents to assess your financial health and the viability of the loan. Commonly requested documents include financial statements, tax returns and bank statements. -
Research and choose the best lender
Not all lenders are created equal. Research your options, including banks, credit unions and specialized equipment financing companies. Look for those that offer favorable terms, understand the construction industry and have positive reviews or customer testimonials. -
Submit your application
Once you’ve chosen a lender, begin the application process. This may involve filling out an online application or working directly with a loan officer. Be thorough and accurate when providing information, as discrepancies can delay or jeopardize your approval. -
Review terms and finalize the deal
If your application is approved, you’ll receive an offer detailing the loan’s terms, including interest rates, the repayment schedule and any associated fees. Review these terms carefully. If everything appears satisfactory, sign the loan agreement.
Frequently asked questions
Heavy equipment financing allows businesses to purchase essential equipment without paying the full cost upfront. The business gets a loan to buy the equipment and agrees to a structured repayment plan, typically involving monthly installments.
The credit score you need to finance heavy equipment varies depending on the lender and the loan type.
A higher credit score will generally allow you to secure more favorable loan terms and interest rates, though some lenders may offer equipment loans for bad credit.
If you have poor credit, lenders may be more open to considering your application if you make a down payment.
The length of a heavy equipment loan varies by lender. Many lenders offer loan terms up to five years. However, the SBA’s 504 loan program also provides loans for 10, 20 or 25 years.
Whether you should finance construction and other heavy equipment depends on your business’s financial situation, operational needs and long-term goals. To make the right choice for your business, weigh the benefits of owning the equipment against the costs and commitment that come with a financing agreement.
Our methodology: How we chose the best heavy equipment loans
We reviewed more than a dozen lenders to find the best heavy equipment financing companies. To make our list, lenders must meet the following criteria:
- Minimum credit score: While the lenders on this list work with a variety of credit profiles, we prioritize lenders who have a minimum credit score requirement of 680 or lower.
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: We consider each lender’s reputation and business practices, favoring lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers.
Best construction and heavy equipment financing summary
- Bank of America: Best for a variety of financing options
- Wells Fargo Bank: Best for construction businesses
- Taycor Financial: Best for startup businesses
- Commercial Fleet Financing (CFF): Best for trucking industry businesses
- U.S. Bank: Best for SBA loans
- National Funding: Best for low upfront costs
- OnDeck: Best for short-term loans