Benefits of Construction Equipment Financing

benefits of construction equipment financing

Businesses in the construction industry are always looking for ways to save money without compromising on the quality of work they do. They want skilled construction workers, top-quality building materials, and the best equipment for the job at hand. As you know, equipment plays an important role in every construction project, and it is very expensive.

One purchase option that is popular among construction companies and contractors nationwide is equipment financing. If you are not fully aware of how equipment financing works, read this Balboa Capital blog post. It explains some of the key benefits of construction equipment financing.

Gets you out of a bind.

Perhaps you have a construction project coming up in the next few months, or you need to upgrade a specific piece of equipment. Financing is a great way to get the equipment you need now, without having to break the bank. The initial investment to get started is easy on your budget, and so are the monthly payments. This allows you to allocate your cash flow to other important channels, such as payroll, materials and insurance.

Because the equipment financing process is quick and hassle-free, you can acquire bulldozers, tractors, excavators and more in a relatively short amount of time. That means your construction jobs can stay on schedule and not experience any interruptions. This makes your clients happy, and helps you make more money.

Builds working capital.

It takes money to make money. That said, using up all of your company’s cash or its credit line to acquire construction equipment is not a smart business move. You should always be prepared for an unexpected economic downturn, or a decrease in construction jobs. If you buy equipment outright and your revenues come to a halt, you need capital to help you stay afloat.

Financing construction equipment is a great way to preserve and build your capital. A predictable monthly payment is all that is needed, which allows you to save for the future. Being able to boost your capital reserve each month can reduce or even eliminate the stress and anxiety that are associated with financial problems.

Opens doors to new construction jobs.

The types of jobs that your construction company works on will depend on your company’s size, capabilities and equipment. Whether your business does small commercial and residential renovations or large multi-unit projects, there are always opportunities to expand into new areas and markets. If a project is large and involves architects, accountants, and building managers, to name a few, it will most likely require additional construction equipment and technology.

If you are invited to bid on a job with a size and scope that you are not accustomed to, do not pass on the opportunity simply because you do not have the necessary equipment. You can finance everything you need and take on new construction jobs as they become available. If you are not willing to keep up with changing trends and adapt to market demands, you might lose jobs to the competition and set your construction company up for failure.

Potential tax deductions.

Construction equipment financing can present you with some nice tax advantages when tax season comes around. The Section 179 tax deduction allows you to deduct the purchase price of qualifying equipment that you purchase and put into use from now through the end of the year. Section 179 works with equipment financing and cash purchases.

If you are closely managing the cash flow of your construction business, you can leverage an equipment loan to minimize out-of-pocket expenses and take advantage of Section 179. There are limits to how much you can deduct each year with Section 179, and not all equipment is eligible, so make sure you call your accountant before moving forward with a purchase.

The information in this blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, investing or accounting advice. You should consult with your accountant, lawyer or tax advisor before making any business decisions or moving forward with business funding.