The first is rates. I’m not a fortune teller, but I have been pretty spot-on with my rate predictions over the past three years. And currently, we seem to be at a crossroads. After a year-plus of large hikes, then a few rounds of small cuts, things have leveled off. The truth is, we’re not likely to see any more cuts for the foreseeable future. In fact, depending on how things shake out the next few months, we could even see another hike before we see another cut. 

Basically, what I am saying is today’s rate is likely going to be your rate for quite some time. And with a fairly uncertain world economy right now, locking in a fixed rate on something you need is a smart thing to do.

Second reason: Used equipment inventories are bursting at the seams. Every single pre-owned equipment dealer and auction house we talk to has seen their used equipment inventories swell over the last few quarters, and they are looking to pare down. There are several economic reasons for this that go all the way back to the pandemic and supply chains, but the fact is right now, the glut of used equipment available is unsustainable for dealers. 

What this means for business owners is there are some fantastic deals on all manner of used equipment – used vehicles and used machinery in particular.  If you have a need for something, definitely consider a used model – you will likely be pleasantly surprised at the value you can get. And yes, you can finance used equipment and lock in a great rate right now. 

I always say it’s a good time to finance equipment (because it is), but right now, Q1 2025, things are especially attractive, and business owners should take advantage.   

There are several reasons for this, chief amongst them is the construction industry is always on the move. When buildings go up, you need heavy equipment. When buildings come down, you need heavy equipment. When roads need to be built, you need heavy equipment. When land needs to be cleared, you need heavy equipment. When debris, goods, or even concrete needs to be moved, scooped, hauled, and/or delivered, you need heavy equipment. 

Basically, you need heavy equipment for any kind of heavy work. So there’s always a need.

Second, heavy equipment almost always produces immediate revenue, and it keeps producing it. If you finance new furniture or fixtures, the monetary payoff might be measured in years. But a new backhoe? That can go in the field tomorrow and earn substantial revenue right away. 

So there’s the revenue impact that is both immediate and substantial.

But there’s another reason: construction equipment tends to age well and holds value long after your equipment loan is paid off. 

I have a neighbor who is in his 70’s. He’s (sort of) retired from owning a construction business, but he still keeps his 15-year-old backhoe around. He uses it to help neighbors, and occasionally will hire himself out for a day when he feels like it. But also important to him is the fact that he could sell it tomorrow for “a pretty penny” as he puts it.  He always has some budding construction entrepreneur asking about it. I suspect he’ll never sell it, but for him just knowing it’s wanted has meaning. 

This is important for any company. Sure, things like backhoes and other heavy equipment depreciate, but there is only so low it will go. The used heavy equipment market is quite robust. And this used heavy equipment typically comes from more established companies upgrading. So for them, owning something that keeps solid value never hurts.  

There’s almost no downside to financing construction equipment. Get it in the field to earn revenue right away, and let it bring you that “pretty penny” years down the road.

Used heavy equipment financing is something Crest Capital has done for more than 30 years and remains one of our core offerings. We finance heavy equipment for both equipment purchased from a dealer, and we also finance private party used heavy equipment sales. In some cases, we even financed a piece of equipment when a company bought it new, then six years later financed the used sale for the new owner.

One big reason used heavy equipment is a robust industry is that most pieces of heavy equipment are not as impacted by technology as much as other types of equipment. Of course I’m not saying advances have not been made – today’s heavy equipment offerings are definitely better than yesterday’s – but the advantages may not be immediately noticeable, especially when it comes to the core work. An older backhoe can generally hold its own against a newer model for most backhoe-related functions. An older dump truck can still do what a dump truck is supposed to do – hold and dump its cargo. The interior, engine, and creature comforts may differ radically, but the “hold and dump” parts will be similar. A profitable, growing construction company can certainly find use for a used dump truck.    

There’s almost nothing I like better than talking to someone about financing used heavy equipment. I like construction people in general, and there’s always some excitement in the air when a used backhoe, dump truck, skid steer, or similar is changing hands. And I enjoy it when businesses are happy about getting new-to-them equipment and seeing a profitable future.

If you’re in the construction industry, you can probably look back and feel an affinity for a certain piece of heavy equipment you no longer have. It may not be today’s shiny new model, but I’ll bet you’d like to operate it one more time!

The company in question is a tree service company, and since he’s become a client, I’ve gotten to know the owner quite well. He started out with a bucket truck, a stump grinder, and a few chainsaws that he got from his father – classic son taking over dad’s business. Dad never got beyond “him and a helper” but his son had bigger ideas.

Fast forward two years: the company finances looked great, and the phone was steadily ringing. He felt he was ready for a leap and decided to get a second bucket truck and a chipper. Adding these would greatly expand his capacity and meet the ever-growing demand for his services. He went to his local bank, and ultimately, was surprised by their reaction.

After speaking with a loan officer, they did agree to loan him money, but there were a few catches. The first was he had to make sure his bank balance never got below 80% of the loan value. As a long-time customer of the bank this bothered my friend, almost like they were locking away his money because they didn’t trust him.  

The second part was they would not loan him all the money he needed. They balked at the chipper, telling him to wait on that. They couldn’t see that he needed it – having that chipper made an immense difference in his level of service.  

He left the bank dejected. Maybe he wasn’t as successful as he thought, and his visions of business growth were not valid. But brighter days were ahead. 

He looked online, found Crest Capital, and we spoke. And it turned out, he was an ideal customer for us – a company in business for more than two years that is both successful and growing. We said yes to both the bucket truck and the chipper. No matching bank balance necessary – quite frankly, we didn’t care about his bank balance. 

Years later, he’s still a customer, and he has several crews out there at once, all with equipment we financed. By all accounts, he’s done well. And would you know, he still mentions how much that first “yes” meant to him. That it validated his visions of success and showed him that successful business partnerships do not have to be completely one-sided. 

How can we help you today? 

The implication is that there really is no better time than right now, unless we have a time machine. Which we (sadly) don’t.

The same goes for acquiring equipment for your company – there is almost no better time than when you need it. Forget market conditions, and forget trying to time things economically. If you need it and can afford it, get it. Because you can’t grow without it.

And it’s not just growth. You also need to keep pace with your competition. Imagine your main competitor showing up to jobs with much better gear than you have. Or sending out a better product, faster. Or handling customers more efficiently. These instances can only go on so long before they make a serious impact.  

Over the years, I have seen hundreds of small businesses try and “time” things, waiting for economic conditions to be perfect, before taking the plunge on an equipment investment. In almost every case, they left serious dollars on the table. The impact of new equipment, and the revenue and profits it could have produced, far exceeded whatever they saved by waiting for market conditions to be just so.

By all measures, we have a good economy right now, but there’s also a lot of uncertainty that causes companies to sometimes pause. However, I feel that this uncertainty will be static moving forward – our deeply embedded 24/7 news cycle guarantees that. News needs clicks, and clicks come from constant new content. And the most popular/clickable content is typically the inverse of what’s happening. “Storm clouds ahead” gets more play than “hey look, another nice day coming up”.  

But right now, the day is indeed nice. And new (or new to you) equipment can make it even nicer. 

The general purpose of this clause is related to the residual value I mentioned last post. When a lease agreement is made, the Lessor (that’s us) has an expectation that the equipment will have a certain value at the end of the lease. The Lessee (you) are generally paying for the usable life of the equipment during the time you have it. 

In order to arrive at the predicted residual value, the equipment must be both used in the manner it was intended, and also be maintained in accordance with the manufacturer’s specifications. 

In general, the terms regarding maintenance and wear and tear will look similar to the following (note: these are simply big-picture examples, and not legal statements):

The Lessee will: 

• Keep the equipment in good condition and make non-warranty repairs at its own expense (depending on the equipment, there may be a further provision stating that repairs need to be performed by an authorized/licensed entity.) 
• Keep the equipment properly maintained and serviced as per the manufacturer’s specifications/recommendations (again, perhaps by an authorized service entity. Oh, and keep records too.) 
• Ensure the equipment is used properly, and only by competent, trained employees.
• If applicable, keep/store the equipment at the agreed-upon location.
• Not change or add to the Equipment unless agreed upon.
• At lease end, return the equipment in good condition and working order, with ordinary wear and tear resulting from proper use.
• Make the Lessor aware of any accidents, damage, or similar. 

In most lease agreements, assuming proper and intended use, the residual value is typically spot on. But if it is not at the predicted amount due to abnormal use – if there’s damage, excessive wear, or similar – the Lessee will certainly find themselves responsible for making up the difference between the actual value of the equipment and the residual value. 

*Note that there can be a gray area between what’s considered normal wear vs. excessive wear. The Lessor is the one who determines this, typically by referencing industry guides and manufacturer’s specifications.

It is always best to look at a lease agreement and leased equipment like you would if you were borrowing a tool from a friend, or better still, a beloved family member. You want to give it back in the expected condition, and while it’s with you, care for it as if it were your own. 

The reason he was elated is because this type of transaction is typically an instant reject from most equipment financing companies. Most lenders – the bank included – simply do not like private party equipment financing deals. This includes machinery and other equipment, business vehicles, furniture, and similar. It doesn’t really matter what the equipment is – most lenders want to see a manufacturer or an authorized dealer as the seller.

Conversely, while Crest Capital looks at deals with a discerning eye, that eye is attached to a person, and we will consider private party equipment financing deals. It’s actually a pretty large differentiator in our industry, and allows us to stand alone. 

Now for the obvious question: “why don’t most equipment financing companies like private party deals?”

It’s simply an answer of both risk (to the borrower) and work (for the lender). And this risk and work involves ownership of the equipment and past liens. I have written about this previously in a post called What Is PMSI, and Why Is It Important in Equipment Financing?, which goes over the basic details. In short, it’s a tricky subject with a lot of moving parts and no guarantees, which is why I am reluctant to say anything definitive about it. 

But I can say that part of what makes an “authorized dealer” an authorized dealer is they generally do the legwork on UCC and title issues. This gives the buyer a bit of recourse in case the item has an old lien that nobody knew about or didn’t mention (and old liens happen more than you think.) Since the buyer can actually lose equipment that has an old lien (while still owing the lender money), a dealer will usually step up and take care of the buyer. Private sellers… not so much.

As I stated, Crest Capital is the only lender we know of that entertains financing equipment from private party sellers. But these types of deals do require a little more legwork and time (note: it helps immensely if the seller is the original owner and has all the paperwork.)  And not all of them are going to be approved. 

This all stated, if you do find a nice piece of equipment, the paperwork is there, and the private party seller is the original owner (or the line of ownership can be easily traced), bring us the deal. No promises but we’ll at least take a look! 

He was asking about this because he was already turned down by another equipment financing company due to the vehicle’s age. He wanted to finance a very good condition 2018 work truck for five years, and was told it was too old, which surprised him. Was 2018 really THAT long ago?

I told him I had bad news and good news. The bad news is almost every equipment financing company out there uses the exact same formula – they want the loan term and the vehicles’ age (in model year) to be equal to or less than seven years.

So right now, in the spring of 2023, most lenders will only let you finance a 2020 model or later for five years. The 2018 model mentioned could only get a three-year loan from another lender (note – if the math seems off by one, it’s not – we’re simply not counting the current year twice).

Now here’s the good news – Crest Capital is one of the only business lenders that will consider financing used vehicles without a hard age cap. Instead, we’ll look at each used vehicle financing deal on its own merits, without a pre-defined age formula. In the case of the emailer, his vehicle passed our internal criteria, and we felt comfortable financing it for five years, which we did. 

By their very nature, business vehicles usually age pretty fast, so the “seven years” formula is not really out of bounds. But as a small business lender, we feel it’s a better service to our customers to look at a used vehicle financing deal with a little more personal touch. Many times, a used vehicle three / four / five years old is still a very viable vehicle with many years of useful life left, and an excellent value for the buyer. And if that’s the case, we’re one of the only equipment financing companies that will consider financing it for five years.    

After all, like all of us getting older say, “age is just a number”. 

2022 was the year of inflation and interest rate hikes, both of which I’ve discussed at length in this blog. But there’s no getting around it – high inflation and rising interest rates (which are rising to combat said inflation) have affected every business out there. 

So with that in mind, here are a few year-end strategies that can help your 2023 start off right. 

1. Remember That Rates Are Likely to Keep Rising

I’m confident that the rates we have right now will be lower than any rate we see in 2023. Hopefully we won’t see several 75 basis point increases in a row anymore, but the scenario of “no 2023 increases” is extremely unlikely. And decreases are even more unlikely. 

This means you really can’t afford to hold out for lower rates if you need to replace machinery or make improvements. Because you will be holding out for a looong time. Which brings me to… 

2. Do More Than Your Competition.

Think about cyclists racing – the prevailing thought is you separate yourself from others on the difficult hills, and not the flat ground where it’s easy to ride. It’s the same right now for businesses.

In a booming economy with low rates, everyone can be a competitor. But it’s in the more difficult economic times that companies really make strides and pass others. Let everyone else turtle because rates went up a point or whatnot. Demand is still strong for most industries, and the companies that can best meet that demand will be the winners once the economy turns (and it always turns).  

3. Don’t forget your Section 179 deduction. 

Listen, I know taxes and “the IRS” are the last things you want to hear right now, but hidden within those words is the single best business tax deduction possible: Section 179.

Almost every piece of tangible equipment you bought for your company in 2022 is likely eligible for a full Section 179 deduction. And the deduction is good up until $1.08 million dollars of purchases is reached. 

For small businesses, that prettymuch means your entire years’ worth of equipment purchases can be deducted (as opposed to depreciating a small amount each year). Depending on your revenues, that can make a massive difference in your bottom line right now. And what company out there doesn’t need the money right now?

2022 was not easy by any stretch. But we’re all still here and 2023 is coming no matter what. This is what we have to work with, so let’s make the best of it. 

Happy New Year everyone! 

I’ll start out by saying “hot” is a relative term. The current climate of supply chain delays, shortages, and inflation basically mean nothing is really “hot” like we used to think of it. But there are a few industries and equipment types that are holding serve.

Like last year, construction equipment is still quite popular. No matter what the economy has done over the last two decades, we’re still building, retrofitting, rebuilding, developing, etc. 

In many parts of the country, homes are being built at record paces, and buyers are lining up. In my own neighborhood, when a home goes up for sale, it seems like there are ten prospective buyers in ten minutes. So companies are still building, and we’ve never stopped financing construction equipment.

We’re still seeing technology-related equipment remain strong, but I feel that’s more for scarcity than anything. Chip shortages are real, and when a company sees a piece of high-tech equipment available, they snap it right up. CNC Machines of all types aren’t in warehouses very long, if at all. Waiting lists for equipment have become a thing. 

Of course, one of the biggest markets of all right now is used equipment, across the board. Used “everything” is hot right now. This obviously extends to the above-mentioned construction equipment, but almost anything used can be moved if it’s in decent shape. 

The reasons are many. When companies cannot find a new version of a needed piece of equipment, they turn to the used market. In addition, many companies have closed / owners retired during the pandemic, but their machines, fixtures, POS systems, and similar are fetching solid dollar amounts. Whether sold through dealers, auctions, or private party equipment sales, used equipment is still very robust. 

Like last year, I’m not going to do a “what’s not hot” post, because in plain terms, I don’t like pointing out industries that aren’t doing well. Business can be hard enough without me reminding everyone about industries that have seen better days. 

That said, it does please me to shine a light on industries that are still strong. We read a lot of doom and gloom, but I can attest that many industries are calling us daily, and my commute is still slower than it needs to be due to construction. But I take that as a good thing, and not a bad one (it’s a good way to look at a traffic jam!)