by Susan Paige
Do you know how hard it is to start a business in the US?
But there is some good news, especially for construction startups.
Not only is the construction industry in the US showing a positive growth trend, but it’s also projected to generate around 1.45 trillion U.S. dollars in revenue by 2023.
It’s safe to say you wouldn’t mind the challenges of starting your construction company including obtaining finance for the equipment you need if you get a share of that 1.45 trillion pie.
That said, here are the steps you need to take to secure construction equipment financing.
1. Identify Your Construction Equipment Needs
What construction projects will your company take on? You need to be clear on this because you don’t have to get a loan for everything. Maybe you can buy some construction equipment second-hand and then get financing for the rest.
Once you’ve identified which heavy equipment needs financing, you’ll want to check different vendors and ask for quotes. From there, you can look at your financing options.
2. Obtaining Finance: Know Your Options
Do you go for bank funding or online lenders who specialize in heavy equipment financing?
Bank lending is ideal if you want the longest terms and the most affordable capital. But there are strict requirements and getting approved might take some time.
If you want a faster way to get finance for your construction business, online lenders are your best option. They don’t require a ton of paperwork, but the tradeoff is the interest rates might be higher. Make sure to shop around to get the best terms for your construction equipment financing.
3. Decide If You Should Lease or Loan
Heavy equipment financing can be arranged as either a lease or a loan. With a lease, you pay a certain amount every month. When the lease term ends, you can buy the equipment or return it to the vendor.
If you get a loan, you’re the owner of the equipment. You’ll still make payments each month, but in the end, the equipment’s yours to keep.
4. Meet the Requirements
Now you know your financing options, and you’ve already decided between leasing and loaning. The next step is to prepare the necessary paperwork and any other requirement your lender may ask of you.
These could include your financial statements, tax returns, equipment quote from a vendor, and so on. It’s best to compile these ahead of time so you can get approved for your loan or lease faster.
5. Apply for a Lease or a Loan
You’ve chosen a lender and you’ve done your best to meet the requirements. All that’s left now is to apply for that lease or loan, and wait until you’re approved.
When you hear the good news, make the most out of your rented or new equipment. Complete jobs and make sure you don’t default on payments. With hard work and some luck, you’ll see your construction business grow and turn a profit.
Want More Business Tips and Advice?
Obtaining finance is just one of the things you need to do when starting a construction business. There’s more to take care of such as getting permits and registrations, meeting tax requirements, hiring employees, and so on.
As a final note, you’ll want to be sure you have an adequate insurance policy. Lawsuits on construction sites are not uncommon, so you’ll want to be sure you have coverage. If this is the case, and you need to hire an attorney, we recommend Schafer Law. They’re a trial law firm located in Massachusetts. In the new England area, they’re the best in terms of construction site accident lawyers. If you have a need, give them a call. You won’t regret it.