Why Financing Material Handling Equipment Makes Sense

By | October 19, 2015

Crest Capital makes it simple to finance material handling equipment for your businessLet’s discuss another type of equipment in this series – today, it’ll be “Material Handling Equipment” financing, and why it makes sense.

First, let’s discuss what material handling equipment is. It’s any equipment that’s involved in the moving, storage, protection, or control of materials or products. Usually, this moving/storage/control is in relation to manufacturing, distribution, or disposal of said goods.

To paint a clearer picture, think of a warehouse. The giant steel shelving is material handling equipment. The forklift is material handling equipment. The pallets and pallet jacks are material handling equipment. The giant shrink-wrap machine to bind together goods on a pallet for shipping, the conveyor belt, the on-rails transport, the raised platform… it’s all technically material handling equipment.

Financing (or leasing) material handling equipment makes excellent sense for companies. Why? The biggest reason is that while it’s very much needed, and contributes greatly to an efficient operation, it’s not seen as directly tied to making a profit. In other words, material handling equipment generally doesn’t make anything – instead, it moves, stores, and delivers it.  So in a strict cash flow sense, the return on investment (ROI) is spread out wider, and more tied to efficiency and timing than straight markup.

This makes material handling equipment an excellent candidate for financing, because spreading out the payments over several years definitely helps cash flow. Combine this with the fact that almost all material handling equipment qualifies for a Section 179 deduction, and it’s clear why a company would want to finance material handling equipment.

One more aspect of this: because, as stated, it’s not profit-making equipment on the surface, many banks will frown on writing a material handling equipment loan. But not an equipment financing company – in fact, that’s exactly what they are in business for.

So yea, while the outside world thinks a metal shelving system (et al) is boring, I see it for what it is – sleek, stylish, and exciting (don’t tell Mrs. Fletch!)

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