Are you considering the option of crane equipment financing to grow your business?
It is, no doubt, a great idea since often it’s a long process to secure a crane itself, and the last thing you would want to have is a roadblock with your crane finance.
Cranes can cost a fortune…
Construction crane prices could range anywhere from $150,000 to over a million.
Now… what does that mean for you?
What that means is that unless you are an outright millionaire, you’re going to need crane finance!
What about used crane equipment financing?
Used crane equipment finance is tempting…
It’s not the best choice for everyone.
Here are a few things to keep in mind when considering used crane equipment finance:
Loss of Quality and Dependability
Sure, you could get a bargain or find a deal for a used crane, but in this case, you will be left compromising quality and dependability.
Maintenance is a Safety Necessity
It’s no secret that maintaining a crane’s health is a lot of work. You’ll have to make sure the prior crane operators did a good job keeping up with the maintenance and the crane boom works properly.
Not doing necessary safety checks could compromise the safety of your workers…
Many crane equipment finance companies will require a very strict condition report on a used crane. Running the risk of the crane boom failing could be detrimental to your crane business. Then you'll be stuck with a broken crane and a crane rental. And no one wants that…
A faulty used crane could end with you in the middle of a costly liability case…
Consider new crane financing
So... what are your crane finance options?
There are plenty of crane finance options.
Some more convenient than others.
a) Bank Loans
You could go with bank loans.
Yes, but that is not going to come easy.
Due to the large numbers involved in crane leasing, a bank loan will not be sanctioned just merely on your credit score and a few bank statements.
Bank loans will require shelling out huge down payments, usually around 20% down, which means having less working capital to begin with, which brings us back to square one.
Another downside is that banks will also put a blanket lien on your business which could limit the amount of additional debt your business able to take on to scale up.
b) Crane equipment financing with crane equipment finance companies
This could be your best bet here.
Crane equipment finance with crane equipment finance companies could save you a large amount of upfront cash and helps you make reasonably sized payments each month which could come straight out of your budget.
Crane finance in the equipment finance industry has many attributes that will help you expand your business.
Finance provides the options of making lower down payments.
Once you’re established, crane finance is often offered on special promotions like low initial payments or deferred payments for the first three to six months.
So... what does this mean to your business?
Crane equipment finance is extremely beneficial for your business revenue.
You now don’t have a significant amount of cash invested in a crane which gives you the freedom to use the available cash in other appreciating investments.
You are now able to focus on increasing revenues and ensure that the crane purchase enhances your business efficiency and earn more profit.
Based on the revenue generated and the profit associated with your crane purchase you can also adjust the length of the crane leasing agreement and the amount of payment you decide to make each month.
That brings us to the question…
What are your options for your selected mode of crane equipment finance?
Time to get technical…
Crane leasing or finance companies offer a variety of leases.
You’ll have the option of:
• $1 Buy-Out lease
• 10% PUT Lease
• FMV buy out lease (lowest crane rates)
• TRAC Lease
• Equipment Finance Agreement
Let’s get into the details
$1 Buy-Out Lease
A.K.A. a capital lease. This lease allows the company to lease the equipment for the set period of time and then buy it outright at the end of the lease for $1. The monthly payments for this lease are likely higher than other leases.
But… there’s a benefit to this lease…
It comes with a $1 buyout at the end of the lease, so companies may spend less money long-term.
10% PUT Lease
A 10% Purchase Upon Termination lease reduces the total lease amount so that the financing amount is 90% of the total cost of the equipment.
At the end of the lease terms, the company has a chance to buy the equipment outright for the final 10%.
A.K.A. an operating lease, a Fair Market Value lease lets the company use the equipment for a predetermined amount of time.
It gives a few end-of-lease options, including:
• continuing to lease the equipment
• returning the current equipment and upgrading to something new
• purchasing the equipment at its fair market value price
A terminal rental adjustment lease (TRAC) gives the advantages of leasing as well as provides you with the option to purchase the crane at the end of the lease.
This primarily gives you 3 benefits…
1. The option to buy the crane or buy another crane when the lease is over.
2. The sale price of the crane is predetermined so you do not have to negotiate or secure a price on the crane at the end of the lease.
3. The options to either choose a low purchase price and a higher monthly payment or make low monthly payments and opt to pay a higher purchase price at the end of the lease term.
An Equipment Finance Agreement is kind of a combination of a lease and a loan. An EFA usually comes with the best early pre-payment options.
The finance company does not put collateral on everything your business owns like a bank loan would do. You own the equipment at the end of the term, so this is a basic way of acquiring crane finance.
With an EFA you remain the owner the entire time and just make monthly payments back to the bank.
The biggest advantage or boost that crane finance can give your business is that it permits you to stay abreast with the latest crane models.
Newer versions of overhead cranes, rough terrain crane, jib cranes, mobile cranes, all-terrain crane and telescopic cranes are constantly being manufactured with better features and using the latest technologies.
How do you leverage this fact?
Marketing your business with the use of these latest models allows you to get clients who are constantly looking for more reliability and dependability with the use of such huge cranes. This translates to an increase in revenue and leaves your business with a larger bottom line.
With certain crane financing groups, you could have the option to upgrade to a new crane at the middle and beyond point of the crane lease. This will keep your business a step ahead of your competitors.
Crane finance makes it easy to expand your business.
As your business grows you now have the purchasing power to buy another crane.
Some crane finance companies may even accommodate financing for soft costs such as delivery, operator training, warranty, taxes, custom installation costs and service agreements.
Now, with crane financing taken care of, you have your other crane credit lines from your local bank or other crane financial groups to further develop and grow your business.
Your business now has the flexibility to bid new contracts without having to worry about having the working capital you spent on a crane.
The other advantage is that having a monthly payment fixed, you are now in a position to accurately budget how much you will be paying for your crane every month.
This allows you to have a better perception as to how you can manage costs and have better cash flow in other areas of your business such as:
This, in turn, will give you a stronger foothold for upgrading or acquiring additional cranes and equipment.
Final Thoughts on Expanding Your Business with Crane Finance
Crane finance gives you more options to select the right crane for your business.
Instead of making a cost-based decision and settling for a lower capacity crane or selecting one that is not ideal for your business you can now make the right choice to meet your business needs.
Growing your business is in your hands so make sure you are well aware of the crane finance leasing agreements and use it well to your advantage.
As in any business, there could be ups and downs in income over the year. Crane leases can also be set up around your business needs so that it is set for success.
You could make it so when you finance a crane you only make 9 payments out of the year and take the first three months off your lease term to get things rolling.
Costs of purchasing a crane and additional crane equipment can add up quickly depending on your requirement of capacity, space and other custom specifications or specialized engineering requirements.
At Trust Capital, we are dedicated to helping your business expand by providing the lowest crane loan rates in the equipment finance industry. We’ll guide you through everything you need to know about just how much it cost to rent a crane and all the finance along the way. For the lowest crane lease rates in the equipment finance industry call Trust Capital at 866-458-4777.