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Heavy Equipment Financing: What to Know and Where to Find Loans

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If you don’t want to buy a large piece of machinery outright, consider heavy equipment financing instead. Heavy equipment loans or leases allow business owners to pay for the cost of machinery over time. They could help industrial businesses, such as construction or landscaping firms, get much-needed equipment quickly. If you need equipment to build, dig, flatten or move large materials, heavy equipment financing could help you get the job done, even if your credit is less than perfect.

The difference between heavy equipment financing and equipment loans

Heavy equipment financing and general equipment financing work the same way with one big difference: Heavy equipment financing is true to its name in that these loans typically cover large machinery, such as:

  • Bulldozers
  • Cement mixers
  • Drills
  • Farm equipment
  • Forklifts
  • Jackhammers

General equipment loans, on the other hand, are designed for a broader range of businesses that need smaller assets like building fixtures or industry-specific items like gym machines or commercial ovens.

You could use a standard equipment loan to finance large items like bulldozers or forklifts, but heavy equipment financing is designed for machinery needed to complete major construction jobs. If the assets you need fall outside of that scope, you may be better off seeking a standard equipment loan or another type of business financing.

Heavy equipment leasing vs. financing

You can either finance heavy equipment to gradually pay off your purchase, or lease heavy equipment to essentially borrow machinery for a short period. Whether you pursue a heavy equipment lease or loan would depend on what you’re hoping to accomplish:

Heavy equipment loan Heavy equipment lease
You own the equipment at the end of the loan term. You pay to use the equipment, then return it at the end of the lease term. In some cases, you may have the option to purchase the asset instead.
You can depreciate the asset, as it would appear on your business’s balance sheet; However, certain types of leases may also appear on your balance sheet. Generally requires lower or no upfront payment compared with a loan, giving you the ability to invest elsewhere in the business.
No limits from the lender on the equipment’s use or wear. At the end of the lease term, you can return used equipment and lease another brand-new asset as a replacement.

A loan may be the right choice if you can afford a down payment on the equipment and you anticipate using it for a while. You wouldn’t want the loan term to surpass the useful life of the equipment. But if you only need the equipment for a short time, a lease may be the better option. Also, a lease likely wouldn’t require a down payment.

How to qualify for heavy equipment financing

When you apply for heavy equipment financing, the equipment itself would be the major factor in whether you’re approved. The equipment would typically secure the loan, meaning the lender could seize the equipment if you fail to repay your debt. The lender may be more flexible with other requirements, and you likely wouldn’t need to offer other business assets as additional collateral.

However, you should still expect a lender to review your credit history and business financials. The amount you’re ultimately able to borrow, as well as the interest rate you’d receive, would likely be based on the following:

  • Price of the equipment
  • Personal and business credit score
  • Financial standing of the business

You may also need to provide several documents when applying for heavy equipment financing. A lender may ask for:

  • Bank statements
  • Equipment quote or invoice from the vendor or distributor
  • Company tax returns or audited financials
  • Personal tax returns for all guarantors

Heavy equipment financing is often more accessible to bad-credit applicants than other types of business financing. If your personal credit score falls below 600, check out heavy equipment financing companies that cater to business owners who have poor credit. For example, First Capital Business Finance offers heavy equipment financing for bad credit. Keep in mind that lenders offering bad-credit financing may charge high rates.

Heavy equipment financing companies

Online lenders often provide funds within a few days, but they’re not your only choice. You can also find heavy equipment financing from traditional banks, which may take longer to issue funding but could offer more favorable rates and terms compared with online financing companies.

In some cases, you may be able to get in-house financing when purchasing your equipment. For example, John Deere offers installment loans and leases to customers. Ask your equipment vendor about available financing options to compare with loan or lease offers you obtained on your own.

To help you start your search for funding, here are a few heavy equipment financing companies to check out.

National Funding

National Funding offers heavy equipment loan and lease options to small business owners. To qualify, you would need to be in business for at least six months and have a personal credit score of at least 575. You would also need to submit an equipment quote from a vendor when applying for funding. National Funding doesn’t disclose maximum amounts for heavy equipment financing. However, National Funding’s general equipment loans and leases are available up to $150,000.

First Citizens Bank (NC)

First Citizens Bank (NC) provides heavy equipment financing and leasing options to contractors and small business owners. First Citizens Bank (NC) offers heavy equipment financing between $5,000 and $1,000,000 with rates starting at 4.99%. Not all applicants will qualify — your heavy equipment loan or lease amount would likely be based on your time in business, monthly repayment budget and business needs. First Citizens Bank (NC) requires a minimum personal credit score of 620 (680 if you lack business credit). It may also provide funding to cover installation and other costs associated with your machinery. Time to funding is as little as one business day, but speed and performance are subject to your connectivity and other factors outside CIT’s control.

Balboa Capital

Heavy equipment loans are available from Balboa Capital up to $500,000. Balboa Capital collects fixed monthly payments and offers flexible terms. To be eligible for financing, you need at least one year in business and $100,000 or more in annual revenue. Balboa Capital does not require a certain minimum credit score and instead looks for “decent” personal credit. FICO scores between 670 and 739 are generally considered good, while scores between 580 and 669 are fair. Anything below that would be considered poor credit.

SBA 504 program

The U.S. Small Business Administration partners with financial institutions to guarantee loans made to business owners. Among the several SBA programs is the 504 loan program, which provides up to $5.5 million to cover commercial real estate and construction costs. Heavy equipment is also an eligible expense. The 504 loan is actually made up of two loans: one from a bank for 50% or more of the total amount and one from a certified development company (CDC) for up to 40%. The borrower kicks in the remaining 10%-20%. CDC rates are as low as 2.23% while banks set their own rates with a ceiling of 6% over prime rate.


How do heavy equipment loans work?

Heavy equipment loans cover the cost of large construction machinery, allowing you to pay off the expense over time. The equipment typically secures the loan and you wouldn’t need to offer any additional collateral. Heavy equipment leases are also available for machinery that you’d prefer to return or replace after a short while.

Do I have to put up collateral for heavy equipment financing?

No, you typically don’t need to offer collateral outside of the equipment itself to secure financing. However, if your financial circumstances are not ideal, a lender may require additional collateral. This could include additional equipment, real estate or a larger down payment to secure the loan.

What is the difference between equipment leasing and financing?

An equipment lease is a financing arrangement that allows you to pay to use equipment for a set amount of time. Once that period ends, you would typically return the equipment, though some companies offer options to purchase the asset. Equipment financing, on the other hand, automatically provides ownership once you pay off your loan debt.

How fast can I get a heavy equipment loan?

The speed at which you’d receive a heavy equipment loan would depend on the type of lender you choose. Traditional banks tend to take a few weeks or months to process loan applications, while online lenders could process loans in a few days. However, online lenders tend to charge higher rates than banks.


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