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Heavy Equipment Financing

Best Heavy Equipment Financing Options

Heavy equipment is a non-negotiable purchase for many businesses that simply can’t compete or complete their work without this equipment. It is necessary to move heavy equipment and materials and such large equipment certainly doesn’t come cheap. Unless you’re an established and successful business, you’ll need to seek heavy equipment financing to buy the equipment you need.

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What is heavy equipment?

Heavy equipment is any self-powered, self-propelled, or pulled equipment that weighs over 5 tons. It is usually used in the industrial, maritime, forestry, construction, and mining industries. Heavy equipment includes things like bulldozers, dump trucks, tractors, forklifts, cranes, and so on.

How much does heavy equipment cost?

For most heavy equipment, you’re looking at $40,000 to $130,000 for brand new equipment, with costs reaching up to $500,000 for some major rigs. You can sometimes find secondhand equipment for less, which can help you cut costs as a new business.

Types of Heavy Equipment Loans

Understandably, finding financing for heavy equipment is slightly more difficult than finding normal equipment financing or another small business loan. Here are some of the ways you can consider financing your heavy equipment:


If you’re going to finance heavy equipment, you’re almost certainly going to look to a loan or lease to get the equipment you need. Both leases and loans will involve a monthly payment for your equipment with the full amount secured on the equipment, but there are some key differences between the two.

With a lease, you can either buy or simply temporarily own the equipment for a defined period. If you buy, it’s called a capital lease and the lender will loan you 80-100% of the loan amount and you’ll usually spread the entire cost of the loan over the full term of the lease, at the end of which you’ll pay a nominal fee to own the equipment outright.

The other kind of lease is an operating lease, which you’ll be most familiar with from leasing a car. An operating lease allows you to use the equipment for around 2 years for a monthly fee, after which you can trade the equipment in for a newer model, renew the lease, buy it outright for fair market value, or return it.

Heavy Equipment Loan

Heavy equipment loans allow you to spread the cost of the entire purchase over a term (typically 2-10 years). You usually need a down payment for a heavy equipment loan (10-20% on average) but when the loan is paid off, you own the equipment outright, with no further payments needed. Heavy equipment loans generally have favorable terms, since the equipment itself acts as collateral, and heavy equipment holds its value well.

SBA 7(a) & 504 Loans

If neither of those options is for you, the SBA (Small Business Administration) offers two loans that may be a better option for your financial needs. The 7(a) loan can be used for almost any purpose by any small business in an eligible industry with an average net income of less than $5 million. Terms range from 7-25 years (though the latter is generally only for real estate), interest rates can be up to 6.5%, and you’ll need a 10% down payment.

The 504 loan is designed specifically for funding large asset purchases, such as heavy equipment or real estate. Again, you need to have an average net income of less than $5 million. Term lengths range from 10 to 20 years (though expect the maximum to be 10 for equipment) and you can borrow up to $5 million. You’ll need a 10-30% down payment. Interest rates are fixed based on the US Treasury.

Both of these options will offer some of the best terms out there, and the 504 loan can be particularly beneficial, but you do need a strong credit score and credit history to be in with a chance of getting one of these loans.

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Can I get heavy equipment financing through a bank?

Yes, many banks and credit unions offer heavy equipment loans, but you will need to be in prime financial shape (both you and your business!) to qualify.

How many years can you finance heavy equipment for?

In almost all cases, you can finance heavy equipment for 1-10 years.

What is the average interest rate for heavy equipment financing?

This depends on how much you borrow and your personal circumstances, but in general most will sit between 3% and 13%, though can be anywhere from 2% to 20%.

Is it hard to finance heavy equipment?

It depends - it’s easier than getting a business loan of an equivalent value since the equipment acts as collateral, but you still need to keep in mind that the equipment costs tens of thousands, if not hundreds of thousands of dollars. The good news is heavy equipment tends to hold its value well, so the equipment will act as collateral.

Your lender will look at:

  • Your time in business (they want to know that you’re stable)
  • Your personal credit score (they want to see you have a history of managing your borrowing well)
  • Business credit score, where possible
  • Debt-to-revenue ratio (they want to ensure your debt does not eat up all your revenue)

Can you finance heavy equipment with bad credit?

Likely not - or at least, not without it coming at a high price for you. Heavy equipment financing interest rates can be as low as 2%, but also as high as 20%. If you’re paying 20% interest on a loan for $120,000, you’re going to need to be seriously profitable to be able to swallow those kinds of fees - most of the time, that’s simply not going to be the case, even if you’re willing to pay another 20% for your equipment.

What credit score do you need for heavy equipment financing?

Generally, you’re going to need a credit score of at least 620, though 660 or higher will give you the best chance of securing the loan or lease you need.

Best Heavy Equipment Financing Loans

Here are some of the best options for heavy equipment financing:

  • Direct Capital - they offer funding of up to $500,000 over terms of 6 months to 6 years, with rates starting at 5.49%.
  • Funding Circle - offers financing up to $500,000 over terms of 6 months to 5 years, with rates starting at 4.99%.
  • Balboa Capital - offers funding up to $1 million over terms of 2 to 5 years.
  • eLease - a good option for those with less than perfect credit scores. They offer financing up to $500,000 over terms of 2 to 5 years, with rates starting at 6%.
  • Crest Capital - offers funding of up to $1 million over terms of 2 to 7 years, with rates starting at 5%.

How do I apply for heavy equipment financing?

The application process varies depending on what type of financing you choose and who you want to borrow from. If you want to borrow from a bank, you will need to get your documentation together and in most cases, make an appointment with a loan officer at the bank once they’ve approved your documents.

Online lenders make it much easier - you can usually complete the entire application process online.

Regardless of who you apply to, and for what, you’ll usually need the following documents:

  • Business tax returns
  • Personal tax returns
  • Balance sheet
  • Profit and loss statements
  • Income statement
  • A quote for the equipment you want to buy

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Ready to get the funding you need for your new heavy equipment? You’re in the right place. Compare the best heavy equipment loans in our tables and when you find the loan that’s right for your business, simply apply. Our recommended lenders generally make a decision in less than a week (sometimes in just hours) and give you the funding you need to move your business forward.

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