How to Get Heavy Equipment Financing

By Robert Romboa •  Updated: 10/02/22 •  8 min read

Heavy equipment financing can be a challenging process. Lenders typically require a credit score of 650 or higher.

In addition, heavy equipment is viewed as riskier security than other forms of collateral since it quickly depreciates. This makes it a less-than-ideal investment for the lender.

someone working on numbers on a laptop on heavy equipment financing for a bulldozer

SBA loans

If you are a small business owner, SBA loans for heavy equipment financing can help you purchase the heavy equipment you need to continue operations.

But be aware that these loans are not guaranteed. In order to get the best rates and terms, you should work to improve your credit score. In some cases, you can even lease your heavy equipment.

When applying for heavy equipment financing, you can get up to 100% of the cost of the machine. However, you may need to have a down payment or cash reserves if you have a low credit score.

You should speak with a lender about the terms and requirements before applying. Whether you qualify for heavy equipment financing depends on your business’s situation.

SBA loans for heavy equipment financing are made available to business owners by the U.S. Small Business Administration, which partners with banks and other financial institutions to offer various programs to small business owners.

One of these programs is the 504 loan program, which offers up to $5.5 million to cover heavy equipment and construction costs.

The loan comprises two loans, one from a bank and one from a Community Development Corporation.

The CDC loan has interest rates as low as 2.23%, while the bank loan has a maximum interest rate of six percent over prime.

The rates for heavy equipment financing SBA loans depend on several factors, including the loan’s size, the borrower’s credit score, and the business’s age.

However, rates can range from 8% to 29%. Some equipment dealers may advertise low-interest offers of 0% to 5%, but you must have excellent credit to qualify for these offers.

In-house financing

For businesses looking for financing options for their new heavy machinery, in-house financing for heavy equipment offers several advantages.

The first is that it enables you to tailor a financing plan to your client’s specific requirements. Third-party lenders typically offer a one-size-fits-all solution that may not suit all businesses.

In-house financing for heavy equipment offers more flexibility and a tailored approach to financing, which may help you close more deals and gain the benefits of your heavy equipment sooner.

In-house financing for heavy equipment is available from a variety of lenders. Generally, lenders hold title to the equipment until payment is completed, after which they transfer ownership to the business.

However, if you fail to make your payments on time, the lender can repossess your equipment or sell it to recoup their investment.

Another advantage of in-house financing for heavy equipment is that it builds equity over time.

The payments you make on your equipment over the lease term will build equity, which you can use elsewhere in your business.

Another advantage of in-house financing for heavy equipment is that you get to use it as you see fit, and you will have the option to buy it once you’re done with the lease. This gives you flexibility and ease of scheduling equipment replacements.

In-house financing can be beneficial in emergencies. If you need heavy equipment immediately, in-house financing may be a better option than any other method.

However, you should check with different lenders to get the best deal. As with any other financing method, you should consider getting a few quotes and comparing them.

It’s important to note that in-house financing may affect your credit score.

Are Titles Important When Financing Heavy Equipment?

Titles on heavy equipment theft or sale are crucial in the world of financing. Without proper documentation, it becomes nearly impossible to prove ownership, making it challenging to secure financing. Titles ensure the legality of the transaction, safeguarding both buyers and sellers. Therefore, titles play a significant role in facilitating smooth financing processes for heavy equipment.


Leasing might be a good solution if you need to purchase heavy equipment temporarily.

Leasing the equipment will keep you from incurring excessive debt, and the payments will not count against your debt limit.

In addition, the financing terms and conditions will not limit you in terms of the amount you can borrow.

When it comes to equipment leasing, you may want to work with a legal professional who specializes in this field.

One significant advantage of heavy equipment leasing is that you can customize the equipment to fit your needs.

After the lease, the equipment becomes an asset on your balance sheet, so if you decide to sell the equipment, you can recoup your initial investment.

Furthermore, if you decide to sell the equipment, there are no ongoing payments, which gives you more flexibility.

Another advantage of leasing heavy equipment is that you don’t have to put any money down. This is especially helpful for companies that don’t have a lot of cash on hand. Also, most leasing companies include taxes and installation services.

However, you may need to provide a security deposit or down payment, so it’s important to shop around before committing.

Also, the cost of leasing heavy equipment varies depending on the size of the lease, your credit score, and your location.

Leasing heavy equipment has several benefits, but it’s important to choose the right option. There are several ways to structure the lease to meet your business needs.

For instance, you may want to consider seasonal leasing, which allows you to weigh your payments during busy months and lower them during slow periods.

You can avoid any of these pitfalls by ensuring proper management of the lease.

Section 179 deduction

If you are looking for financing for heavy equipment, you may qualify for the Section 179 deduction. This tax break allows you to deduct up to $1 million of relevant materials.

Buying equipment on finance benefits your business because it allows you to use working capital loans to pay for non-tangible expenses.

The IRS has expanded the definition of equipment that qualifies for this deduction.

One example of qualifying equipment is a new piece of machinery that your company bought for business use.

The asset is new and has no salvage value. In a typical tax year, you would depreciate the asset by $10,000 annually and claim a deduction for the full amount.

With a Section 179 deduction, however, the entire cost of the equipment is written off in the current year.

In addition to this deduction, a business may also be eligible for Bonus Depreciation. This type of tax break is usually used after the Section 179 spending cap has been reached.

Depending on the type of equipment, you might be able to deduct 100 percent of its cost.

Another great advantage of Section 179 for heavy equipment financing is that you can deduct the full cost of the equipment.

This is a big benefit for growing businesses because it can be used to finance other business expenses, such as marketing and hiring more employees. The benefits of this tax break are numerous.

Moreover, businesses should be aware of the limitations of this tax break. It is important to consult a tax advisor before using this tax break.

Down payment requirements

If you’re interested in financing a piece of heavy equipment, it’s important to know what to expect. Most lenders will require a down payment and revenue verification.

This is because heavy equipment typically carries high purchase prices. You’ll likely have trouble raising the money if you don’t have enough cash to make the payment. You’ll also likely need to pay a loan origination fee.

The amount of down payment required varies from lender to lender. A lender will look at your business history and monthly revenue to determine whether you’re financially healthy enough to pay the installments.

A business plan can also be useful for lenders. If your business is profitable, your business may be able to get a loan without much of a down payment.

Although the amount of down payment required for heavy equipment financing will vary based on the lender, many online lenders will accept applicants with less than perfect credit.

However, you may find it difficult to get financing if you have a credit score of less than 620. You may also have to pay a higher interest rate for a loan if you have bad credit.

You may also go through a lengthy application process with your bank. You’ll have to submit a stack of financial documents and a business plan.

A bank can take up to 90 days to respond to your application.

The loan process for heavy equipment financing is similar to a conventional loan. Like any other loan, you’ll be paying interest over time.

However, the down payment required for heavy equipment financing will be much smaller. You can also find leasing options for heavy equipment, similar to equipment leases.

Robert Romboa

Just amazed daily by the heavy machinery used to make our days easier and allow for fast and simple construction from your backyard to a city!