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.

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!)

I always look forward to doing this, because I find the equipment financing industry to be a very good microcosm of the country (and even society) in general. Seeing what industries are borrowing is a strong statement on what’s going on in a big picture sense.

To start, it’s been a solid few years for almost all industries, and we’re still seeing growth all over, but maybe at a slightly slower rate than years’ past (which is normal.) The blanket statement of “everything is still hot” remains true, but that makes for a really short post, so let’s dig a bit deeper and highlight a few industries that are standing out.

• Construction: Things are still getting built in large numbers. If you drive down your town’s main drag, it’s likely you are seeing new buildings going up, which is always a good economic indicator.

• Vocational Trucks: Given my #1, this should be no surprise. Vehicles that move, haul, push, pull, dig, and dump are necessary to any construction or commercial project.

• Machine Tools – Manufacturing machines, shop tools, CNC machines, etc. We always hear about manufacturing taking hits, but what we are still building now is definitely strong, and growing.

• Computers and Software – No surprise here. Technology is always advancing, and successful companies need to stay ahead of the curve if they want to compete.

• Containers – This one surprised me a little, but maybe it shouldn’t with construction and manufacturing still rocking it. Storage and shipping remain very necessary.

I have to be honest – seeing construction, trucks, and machines top the list gives me comfort. You read a lot of doom and gloom sometimes, so the little reminders that we’re continually building, moving, shaping, and innovating always makes me smile. I’m hopelessly optimistic, and like to see industry moving forward, and my annual “hot” list really exemplifies that.   

Hope your day is going well.

It goes back to when I was a kid. As I’ve mentioned in previous posts over the years, I was the guy with the Tonka® trucks. So I kind of gravitate to heavy equipment, construction machinery, and related. Usually when we finance a piece of construction equipment, we get information on the make, model, specs, a picture or three, and similar. Even now, in my adult years, I imagine these immense machines, with giant tires (or maybe even tank treads) moving, pushing, and shoveling earth. I won’t say whether I have a toy truck or three in my desk drawer or not. And if I did, I’m not going to say whether they come out at lunchtime…

One thing I do like is the number of companies that come to us to lease a dump truck or finance a backhoe. In fact, over the last few years, heavy equipment financing has really taken off as the economy improves, and Crest Capital has sort of become known as a prolific heavy equipment financing company (amongst other types of industrial machinery – CNC machines still lead the pack).

Recently, a client mentioned financing and the holidays, and is where I got the title to this post – he said “I felt like the bank was Scrooge, with a long list of legalese. My wife asked me what I wanted for Christmas, and I actually blurted out something like ‘I want a heavy equipment financing company that doesn’t make it hard’. Well, my gift to myself was I found you, and my wife is probably getting me the camera I wanted, so it’s a good December.”

That’s what I like to hear. Now if you’ll excuse me, I have to check my desk drawer before I make my Christmas list…

New and used heavy equipment financing is one of the more popular uses of equipment financing in general. In fact, not a day goes by that I don’t get asked about leasing a bulldozer or financing a backhoe or similar. There are several good reasons for this.

The first is the fact that it makes good economic sense to finance heavy equipment. That’s because this type of equipment is almost always put to work immediately. In other words, if you finance a dump truck, you are putting that dump truck in the field right away, and earning revenue using that dump truck. So the ROI is immediate, and in more cases than not, exceeds the monthly payment.

This cannot be discounted – getting new (or new to you) equipment, and having that equipment generate sufficient revenue to make the payment almost immediately, is the very definition of “no-brainer”.  Almost all heavy equipment carries this trait.

The second reason financing heavy equipment is popular is the cost of the equipment itself. Even used heavy equipment isn’t cheap. So paying cash for a backhoe or bulldozer can really tap a company’s cash reserves – it makes much more sense to finance heavy equipment.

Third is Section 179. Taking the Section 179 deduction on this high-cost equipment allows a company significant tax relief, and leaves more dollars in the bank at year’s end. And the wonderful part of this is you are taking the full deduction while making smaller monthly payments – the tax savings alone might exceed your total payments, further contributing to the bottom line.

Let’s talk about one last reason to finance heavy equipment. I’ll add “use an equipment financing company” to this. And that’s because companies who use/finance heavy equipment will invariably need *more* heavy equipment as the business grows. Establishing a good relationship with an equipment financing company makes it very easy to acquire more new or used heavy equipment in the future.

Heavy equipment is big, and the reasons to finance it are big as well. Happy bulldozing!!

Now, I want to state up front that I’m really happy about this. But there’s one small problem: construction guys like to start early in the morning. Like REALLY early. Way earlier than Fletch usually gets up. In fact, since my commute is really short, I can regularly sleep later than most. But it’s hard to sleep with all that banging.

So I’ll be getting up early the next few weeks. I have to admit, it’s a little odd, as I’m out of my usual place. So I do different things, and sometimes I think different things. Here’s what I thought about today:

The contractor and I got to talking again, and he was asking my advice on Section 179 and the like. He’s looking to lease construction equipment again, and wanted to know what the limits were, what type of lease he should get, if he could lease construction vehicles, etc etc. I was really happy to help him, because sometimes, construction guys make me feel really inadequate. I mean, I’m a decent home repair guy – I can do plumbing and electric and all that, but putting on a roof isn’t something I’m tackling. But this guy – hey, that’s what he does. But then, he comes to me with equipment financing, leasing, and section 179 questions. Because hey, that’s what I do.

As we were talking, my lawn guy came (I wrote about him earlier this year too), and he had to work around the contractor’s guys. And it just occurred to me as I was out there, an hour before I’m usually awake, that we all have our professional roles that we play. My contractor does building, my lawn guy does really good landscaping, and I do equipment financing and equipment leasing (and occasionally write about Section 179 too). And we all work for each other when the time comes – nobody is an expert on everything. I need my roof done, I call the contractor. I need the lawn done (and the back of the hedges trimmed so the contractor could do the siding easier), I call the lawn guy. And when they need construction equipment leasing (or, say, commercial lawn tractor financing, in the case of the lawn guy) they call someone like me.

No real point to this except that I found it interesting this morning. Have a nice day (yawn…)