Construction and Heavy Equipment Financing: Best Loan Options
Construction and Heavy Equipment Financing: Best Loan Options
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SBA CDC/504 loan
Best for Low-interest heavy equipment financing
Max loan amount
$5,000,000
Min. credit score
680
Est. APR
5.00-7.00%
Pros
- Low down payment required.
- Repayment terms of up to 25 years.
- Competitive interest rates.
Cons
- Must meet job creation or public policy goals to qualify.
- Longer processing times than online lenders.
SBA CDC/504 loan
Best for Low-interest heavy equipment financing
Max loan amount
$5,000,000
Min. credit score
680
Est. APR
5.00-7.00%
Pros
- Low down payment required.
- Repayment terms of up to 25 years.
- Competitive interest rates.
Cons
- Must meet job creation or public policy goals to qualify.
- Longer processing times than online lenders.
Max loan amount
$150,000
Min. credit score
600
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
- Charges an origination fee.
National Funding - Equipment financing
Best for Heavy equipment financing for startups
Max loan amount
$150,000
Min. credit score
600
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
- Charges an origination fee.
Max loan amount
$250,000
Min. credit score
580
Est. APR
6.50-34.99%
Pros
- Can fund within one to two business days.
- No prepayment penalty.
- Flexible repayment options: monthly, quarterly, annually or semiannually.
Cons
- Charges an origination fee.
Triton Capital - Equipment financing
Best for Heavy equipment financing for bad credit
Max loan amount
$250,000
Min. credit score
580
Est. APR
6.50-34.99%
Pros
- Can fund within one to two business days.
- No prepayment penalty.
- Flexible repayment options: monthly, quarterly, annually or semiannually.
Cons
- Charges an origination fee.
Max loan amount
$10,000,000
Min. credit score
620
Est. APR
5.99-18.00%
Pros
- Funding available within 48 hours.
- Competitive rates and repayment terms.
- Flexible payment options available, including deferment options for certain industries.
- No down payment required.
- Can be used to build business credit.
Cons
- Must have good credit to qualify for no prepayment penalties.
- Charges an origination fee.
JR Capital - Equipment financing
Best for Heavy equipment financing with no down payment
Max loan amount
$10,000,000
Min. credit score
620
Est. APR
5.99-18.00%
Pros
- Funding available within 48 hours.
- Competitive rates and repayment terms.
- Flexible payment options available, including deferment options for certain industries.
- No down payment required.
- Can be used to build business credit.
Cons
- Must have good credit to qualify for no prepayment penalties.
- Charges an origination fee.
Balboa Capital - Equipment financing
Best for Same-day heavy equipment financing
Max loan amount
$500,000
Min. credit score
620
Pros
- Multiple financing options available.
- Fast funding and simple application process.
- Accepts borrowers with fair credit.
Cons
- Lack of pricing information on website.
Balboa Capital - Equipment financing
Best for Same-day heavy equipment financing
Max loan amount
$500,000
Min. credit score
620
Pros
- Multiple financing options available.
- Fast funding and simple application process.
- Accepts borrowers with fair credit.
Cons
- Lack of pricing information on website.
Commercial Fleet Financing - Equipment financing
Best for Construction vehicle financing
Max loan amount
$1,000,000
Min. credit score
640
Pros
- Offers specialized experience in trucking and construction industries.
- Can fund applications as fast as 24 hours.
- Established businesses may not need to provide a personal guarantee.
Cons
- Borrowers with lower credit scores may need to provide a 20% down payment.
- Interest rates not disclosed on the website.
Commercial Fleet Financing - Equipment financing
Best for Construction vehicle financing
Max loan amount
$1,000,000
Min. credit score
640
Pros
- Offers specialized experience in trucking and construction industries.
- Can fund applications as fast as 24 hours.
- Established businesses may not need to provide a personal guarantee.
Cons
- Borrowers with lower credit scores may need to provide a 20% down payment.
- Interest rates not disclosed on the website.
Wells Fargo - Commercial equipment financing
Best for Established businesses
Max loan amount
Undisclosed
Min. credit score
700
Pros
- Offers lease options in a diverse array of industries.
- Can provide specialized customer experience.
Cons
- Qualification requirements and interest rate information not available on website.
- Will likely have to visit a branch location to apply.
Wells Fargo - Commercial equipment financing
Best for Established businesses
Max loan amount
Undisclosed
Min. credit score
700
Pros
- Offers lease options in a diverse array of industries.
- Can provide specialized customer experience.
Cons
- Qualification requirements and interest rate information not available on website.
- Will likely have to visit a branch location to apply.
What is heavy equipment financing?
Heavy equipment financing refers to a loan that’s used to purchase major equipment or machinery for your business. These loans often serve businesses in the construction, farming, transportation, manufacturing and other similar industries.
Like other types of equipment financing, heavy equipment loans use the machinery you purchase as collateral on the loan.
How does heavy equipment financing work?
Heavy equipment loans are usually structured as business term loans. You receive a lump sum of capital from a lender to buy your equipment and then repay the funds, with interest, over a specific period of time.
Repayment terms on construction and heavy equipment loans typically range from 12 to 84 months, depending on the type of machinery you’re purchasing. Payments are generally made on a monthly basis, although some lenders offer flexible payment schedules (e.g., quarterly, semi-annually, seasonally).
Heavy equipment financing rates can range from 5% to 36% APR. The rate you’ll receive, however, will depend on your business’s qualifications, your down payment and the value of the equipment you’re purchasing.
Construction and heavy equipment financing vs. leasing
When you're trying to acquire construction or heavy equipment for your business, it can be difficult to determine whether a loan or a lease is better for your needs.
In general, if you’re going to use the equipment at least 60% of the time, it will be more cost effective to buy it or get a lease-to-own option. If you’re not going to use the equipment that frequently, leasing — or even renting — may be a more suitable choice.
Here are some other differences to note when trying to choose between equipment leasing and financing:
- Payments. Equipment leases typically have lower monthly payments than equipment loans. You will, however, usually pay more over the course of the lease than you would with a loan.
- Ownership. With financing, you own your equipment at the end of the term. With a lease, on the other hand, the lender still owns the equipment. You may have an option to purchase it, or start a new lease agreement.
- Down payment. Equipment financing usually requires a down payment, which is not usually the case with leasing.
- Lifespan of equipment. Whereas your heavy equipment may become outdated during the loan term, leasing allows you to update your equipment once the lease concludes.
Where to get heavy equipment financing
» MORE: Best loans for restaurants
How to finance heavy equipment
You can get heavy equipment financing by following these steps:
1. Evaluate your financing needs
You should consider what type of construction or heavy equipment you need and how much it’s going to cost. Many heavy equipment lenders will require a down payment, so you’ll also want to determine how much you can afford.
A business loan calculator can be a useful tool to help you estimate payments and interest costs.
2. Review your business’s qualifications
Although business loan requirements vary, most lenders will consider your personal credit score, time in business and annual revenue. You should look at these factors ahead of time to determine where you might be able to qualify for a loan.
3. Find the equipment you want to purchase
Many lenders will want you to provide an equipment quote as part of the application process. You should browse vendors and suppliers to find the equipment you need and determine which company can offer the best price.
4. Compare heavy equipment financing companies
You should research and compare several heavy equipment financing companies to see which one can offer you the best deal (and make sure you can qualify). As you browse your options, you should make sure that the lender can fund the type of equipment you’re looking to purchase — some companies may not fund high-mileage trucks, for example.
You should also consider a lender’s repayment terms, interest rates, fees, funding speed and application process.
5. Gather your documents and apply
The application process for your heavy equipment loan will vary based on the lender. Banks and credit unions, for instance, will require more documentation and may require you to visit a branch location to apply. Online lenders, on the other hand, will typically have fewer documentation requirements and can process applications quickly.
You may need to provide some, if not all of the following:
- Basic information about you and your business.
- Personal and business bank statements.
- Personal and business tax returns.
- Business financial statements.
- Down payment amount.
- Equipment quote.
After you’ve submitted your application and received approval, the lender will provide an equipment financing agreement for you to sign. You should review the loan agreement thoroughly and make sure you understand all the terms and conditions. If you have any questions or concerns, you’ll want to contact your lender directly for clarification.
More NerdWallet resources for construction companies:
Frequently asked questions
Some heavy equipment lenders will accept credit scores as low as 575, while others will require good credit (typically scores of 690 or higher). Although you may be able to access construction equipment financing with bad credit, you’ll likely receive higher interest rates on these loan options.
When you finance construction or heavy equipment, the machinery being financed typically serves as collateral on the loan. You can get an equipment loan up to 100% of the value of the equipment you’re looking to purchase — depending on the lender you work with and your qualifications. Then, you repay the loan over time, with interest.
Repayment terms on equipment financing can range from 12 to 84 months but ultimately vary based on your lender and business’s qualifications. In general, lenders won’t offer financing terms longer than the projected useful life of the equipment.
Last updated on May 7, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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