We finance all kinds of equipment at Crest Capital. But one of the more popular types of lending we do is financing heavy equipment for the construction industry.
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.