Where To Find Equipment Financing for Construction Equipment and How To Get It
Finding the financing you need for your next construction project can be a tricky business. Lots that need to be developed or redeveloped do not typically have enough equity in them to finance major equipment purchasing or leasing. That’s where construction financing fills the gap in your credit portfolio. With structured milestone cash disbursals, you gain access to the equity you build into a development as it goes up. Each phase completed provides you with access to the funds you need to reach the next phase, and that means you’ve always got the working capital for things like equipment overhead.
If you’re wondering how to structure your application for construction loans, the process isn’t that different from applying for other business loans. You still need to disclose your financials, including any sponsorship investment or other non-debt financing. You also still need to put together a business plan that outlines your other financial resources, existing equipment, labor force and marketing for the developed property, any committed customers, and your core leadership. The difference is, your business plan will be built around either turning the property over for resale or putting clients into it for your investors, so they know the space is filled and capable of producing an optimum income.
When lenders review your business plan for construction financing, they’ll need to see that the phases of development are broken down in a way that clearly delineates the schedule for completion, because hitting the milestones on time is key to keeping your property development project moving. You’ll also need to discuss whether you’re going to complete and open portions of the development before finishing the whole thing, or if the nature of the project requires the entire construction to be completed before it can start to produce income.
Since every project has different goals, there are many paths to monetizing new construction. That makes your business plan’s timing and path to financial returns very important. Traditional businesses applying for loans typically have a product that is being sold at the time they apply, so their future income is quite secure. Many developers, on the other hand, won’t see a return until the project is complete. Having clients lined up to move into a space or initial buyers for the first phase of completed lots is integral to demonstrating you have a way to bring the return on the investment that makes construction financing possible.
