How to finance heavy equipment?

Heavy equipment finance usually involves equipment financing and leasing products. The first step is to assess which equipment you intend to purchase and establish the costs with your supplier. Next, enter the business documentation including registration, financial statements and KYC documentation. Lenders assess the financial stand of your business, your current and anticipated cashflow and the productivity of the asset you intend to purchase. The asset itself is usually sufficient collateral, so lenders will have little requirement for security. Some lenders will also accommodate repayment terms being aligned to your cashflow. For example, lenders will let businesses with seasonal requirements have seasonal EMIs or step-up EMIs, where the repayment amount increases at mutually agreed intervals.

When financing equipment, it is important to consider and compare as many lender offers as possible. You have to factor into your decision; interest rates, processing fees, loan term, and repayment flexibility. For highly expensive or specialist equipment, a lease may be worth considering which may help to defer upfront payments and make it easier to promote upgrades. In any instance, whatever you decide to do, always read the agreement clearly so you understand at the end of the term who owns the asset, maintenance obligations and exit options.

There are a range of government plans to assist businesses finance equipment with interest subsidies and different other funding. For example, CLCSS and MSME Technology Upgradation Fund provide interest subsidies for eligible businesses to purchase equipment. A range of digital lenders now have products which provide fast online approvals and good documentation which makes the process easier and often faster. Equipment lease has become very popular for both high value items and/or with rapidly changing technology as it allows for upgrades without having to pay the sum in advance.