3 Ways to Pay for Equipment in Your Construction Business
If you run a construction company, you’re well aware of the many challenges you face. Not only do you need to hire and keep skilled, experienced and hard-working employees, but it’s vital to be on time with project deadlines and produce a high-quality final product. In order to accomplish the work at hand, you need the right tools and equipment. The best equipment can be expensive, which may put a strain on your business. If you need help, you should look into construction company financing so you can have the best tools at your disposal to do excellent work.
Small Business Loan
These loans can be useful for companies in any organization, including those in the construction sector. The great thing about this financing is that you can use it for just about any need you have, including purchasing necessary equipment. You can find loans from financial institutions that offer lower rates. Flexible terms are available, but be careful to choose a term you’re comfortable with. Construction equipment doesn’t often last long, so you’d prefer to not pay for it long after you’ve moved on to other supplies. Be aware also that a small business loan is one type of construction company financing that requires an excellent credit score. You can borrow large amounts as well. This is good news if you have a lot of equipment needs, but be careful to not overextend yourself.
Many construction companies shy away from SBA loans and instead prefer equipment loans. One big reason why this method is more popular is that you don’t need as good a credit score, and it’s often easier and faster to qualify. Once you purchase the equipment, it’s all yours; you can even sell it once you’ve paid off your loan. Most of the time, lenders will ask for a down payment before they’ll approve your application for this financing. On the bright side, this loan is tax deductible.
This is similar to leasing a car versus buying one. With this construction company financing, you keep the equipment for a time and will either return it or buy it from the lender once the term expires. You won’t pay as much per month for the equipment when you lease it, and you know you’ll always get something brand-new. You can’t deduct depreciation from the equipment on your taxes, however.
Study these options carefully and make the right choice for your business when you need construction company financing. Each method can help you acquire the supplies you need.