As more construction companies bring their operations back to the United States after working offshore and more foreign companies establish businesses here, the demand for construction projects just continues to increase. While this is exciting news if you own a construction company, it also hits you with a dose of reality. Construction equipment is expensive, and it is the rare business owner who can afford to purchase even a single piece outright. If you find yourself in this situation, read on to learn more about equipment financing for the construction industry.
Equipment Financing Options
The two primary options you have to finance construction equipment are capital leasing and lease-to-own. Although capital leasing has been the industry standard for decades, it is now falling out of favor due to business owners needing greater flexibility with equipment financing. With capital leasing, you make payments towards and own the construction equipment.
However, the cost of financing the equipment does not go on your books but rather the company that established the lease agreement with you. This can still be a good arrangement, but only if you expect the equipment to last up to 20 years without the need to replace it with a newer model.
Lease-to-own is similar to capital leasing except that you do not need to decide if you want to purchase the construction equipment until the end of the lease. Some benefits of choosing this option include:
- Keeping the cost of leasing the equipment off your company’s balance sheet.
- Competitive monthly payment rates for the duration of your lease.
- Protection against the possibility of owning outdated equipment before you have finished paying for it. If a newer model becomes available, you can inquire with the lessor about upgrading to that model at the end of your lease term.
POM Capital & Funding Services offers equipment financing and other alternatives to bank loans for the construction industry. We will help you determine if equipment financing is the best option right now or if something else would work better. Please contact us today to request an appointment.