Construction Equipment Loans

Typically, construction equipment loans are secured solely or in part by the fixed assets being acquired and structured as a term loan repaid from the customer's cash flow.

Construction equipment loans are generally used to purchase large earth-moving equipment, cranes and other necessary elements of the modern construction site. Because these loans are secured with the equipment itself, loans for construction equipment may require certain precautions regarding the storage and safety of that equipment when not in use. Additionally, construction firms may be asked to provide other forms of collateral if the risk of loss or damage is deemed to be higher than average or if the company has experienced credit difficulties in the past. Construction equipment lenders consider a few factors when evaluating these loan applications, including the financial situation of the construction company, the value of the property to be used as collateral and the overall credit history of the construction firm and its primary shareholders and owners.

Most construction equipment loans are made for a specific term that corresponds to the expected useful life of the equipment. The loan is then amortized over that term. For example, if a bulldozer cost $100,000 new and is expected to have a useful life of ten years, then the construction equipment loan would be constructed to pay off the entire cost of the bulldozer plus interest charges within those ten years. Shorter terms can also be arranged. In most cases, however, construction equipment lenders will not provide loan terms longer than the projected useful life of the specific piece of equipment being financed.

CNF Exchange offers a convenient online venue for construction firms and construction equipment lenders to meet and exchange information. This can allow construction companies to identify the most advantageous lending arrangements for their equipment needs. Additionally, lenders can find qualified borrowers in the construction field, allowing them to improve their financial portfolio and establish long-term working relationships with these hard-working professionals in the construction industry.