Reasons to Consider Construction Equipment Financing

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There are many reasons why businesses seek out construction equipment financing in Canada. For instance, the intensive nature of the industry will often necessitate the purchase of compact attachments and equipment to get to hard-to-reach spaces, as well as heavy-duty equipment for larger projects.

Construction equipment financing

Moreover, construction businesses will also require office equipment and IT tools to handle many clerical and administrative tasks. Here, we will discuss some of the most important reasons why you may want to consider construction equipment financing for your business.

Flexible Options

Most equipment financing enterprises will offer their clients many different flexible options to accommodate their unique cash flow, tax, and accounting requirements without compromise. Leases, in particular, tend to be quite polyvalent and can be tailored to meet the needs of virtually any construction company.

For instance, a business may choose a capped Free Market Value (FMV) lease for their construction business, or they can opt for either a full payout loan or FMV lease transaction instead.

Save Capital

Construction equipment financing in Canada is also seen as very enticing for many construction businesses, particularly startups, as it can allow them to preserve their capital. That is, investing in monolithic capital expenditures can be a risky business venture that can bring a startup to its knees if it does not pay great dividends in the end.

Thus, opting for financing over spending large sums of cash can help mitigate some of the risks involved in investing in a capital asset that may backfire in the long run. In some cases, lease payments can be matched to the productivity of the equipment in question. So, any issues pertaining to poor returns, cost savings, future sales, or even efficiency can be bypassed or compensated for.

Ameliorate Your Expense Strategy

Another factor that you may want to strongly consider is consistent budgeting and maintaining optimal cash flow. Under this scenario, financing will allow your company to devise a balanced expense plan.

On the other hand, the conventional route will often lead to marked capital overlays that will yield significant budget fluctuations and other erratic behaviours. In fact, construction equipment financing in Canada can help with certain accounting or tax difficulties as well.

For instance, equipment loans or full payout leases can allow you to take the depreciation of the equipment that you’ve obtained if needed. Conversely, an FMV or operating lease can allow you to accept lower payments without the effects of depreciation.

A lease will allow you to enjoy lower expenses for the expected duration of the asset, while a loan will allow you to lock in your payments for the expected life of the equipment.

Enjoy Corporate Cycle Flexibility

Another advantage of equipment lease financing is that it provides unrivalled flexibility in many regards. For example, certain lease types will allow the borrower to make lower monthly payments. At the same time, their new project has just launched, as the construction equipment may not be generating any revenue for the business just yet.

Certain leases will also factor in seasonal business fluctuations and other unforeseen circumstances (for example, acts of God), allowing borrowers to take advantage of business cycle flexibility.

Take Advantage of Cutting-Edge Technology

Given the highly competitive nature of the construction industry, companies will need to invest in state-of-the-art equipment to have a competitive edge over their myriad competitors. Unfortunately, many businesses simply cannot afford outright to purchase the latest equipment on the market with cash to compete with the bigger construction companies.

However, one way to even the playing field is through term financing, as it allows smaller businesses to fund asset acquisitions that would otherwise be impossible. Hence, even smaller companies can make use of top-of-the-line construction equipment, which can help them attract more clients and hopefully expand in the not-too-distant future.

Consult with Construction Equipment Experts

While not all equipment financing companies are construction experts, some are, and they may be able to provide you with certain equipment specialties. As well, counsel that you would not normally get from other financial companies.

For instance, many of the most reputable equipment financing companies have unique partnerships with distributors and manufacturers in the industry. Many also specialize in certain categories and equipment types, so they may be able to provide you with IT, construction, and manufacturing equipment that you would be hard-pressed to find elsewhere.

Take Advantage of Managed Obsolescence

Yet another strategic benefit that you can take advantage of via equipment financing is managed obsolescence. That is, any risk involved with owning obsolete equipment, such as IT products, is swiftly taken care of via financing, as most agreements will allow for quick and easy equipment updates.

Thus, if you decide to go with lease financing in order to acquire your construction equipment, then you can make use of managed obsolescence to give you a competitive edge over other companies in the industry.

In addition, many equipment financing enterprises will work closely with their vendor partners and their clients to right-size the asset. To do so, they will often facilitate trade-ups or structure co-terminus exchanges to make sure that their clients have the quintessential piece of equipment for their unique needs.

Most reputable financiers will also handle any ownership burdens, such as equipment disposal when the customer decides that it is time for them to upgrade to something better.

Truck Loan Center

In sum, there are a plethora of reasons why construction equipment financing in Canada may be ideal for your construction business, including reduced risk, equipment disposal, managed obsolescence, and highly dependable asset management.

If you would like to learn more about the benefits of construction equipment financing or would like to take advantage of our construction equipment leasing and financing terms, then please visit Truck Loan Center at our website or call us toll-free at 1-866-230-0094.


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